Finance Minister Mohamed Jadaan approved the Kingdom’s borrowing plan for FY 2025, outlining a requirement for some SAR 139 bn in new public debt, according to a National Debt Management Center (NDMC) statement. Aljadaan’s approval comes following a decision by NDMC’s BoD to endorse the yearly borrowing plan.

The targeted amount is intended to bridge an anticipated SAR 101 bn budget deficit that FinMin penciled in for the new fiscal year, in addition to covering some SAR 38 bn required to meet principals’ repayments for loans maturing during the period. The budget deficit is expected to “continue at similar levels over the medium term” as the government continues to invest heavily in the diversification agenda.

Footing the bill: The Kingdom intends to diversify its borrowing portfolio during the new fiscal year, as it looks to expand its creditor base by tapping fresh local and foreign lenders, the statement explained. In addition to sovereign debt issuances, prospects in “export credit agency financing, infrastructure development project financing, capital expenditure (CAPEX) financing,” as well as new markets and denominations are also on the cards, subject to market dynamics.

IN CONTEXT- The budget deficit is expected to come in at 2.3% of GDP (SAR 101 bn) this fiscal year, according to the new year’s budget statement. The government will not raise taxes to meet the shortfall, Al Jadaan told media outlets following the budget statement release, but will rather tap local and foreign debt markets as it looks to benefit from the interest rate reversal and decreased cost of borrowing.

ICYMI: The National Debt Management Center (NDMC) secured a USD 2.5 bn (SAR 9.4 bn) shariah-compliant revolving credit facility earlier this week to support the state budget. The three-year facility was secured with the participation of three unnamed regional and international financial institutions.

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