{"id":93804,"date":"2025-01-28T00:00:00","date_gmt":"2025-01-28T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2025\/01\/28\/capital-economics-gives-its-two-cents-on-saudi-arabias-public-debt-trajectory\/"},"modified":"2025-01-28T00:00:00","modified_gmt":"2025-01-28T00:00:00","slug":"capital-economics-gives-its-two-cents-on-saudi-arabias-public-debt-trajectory","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2025\/01\/28\/capital-economics-gives-its-two-cents-on-saudi-arabias-public-debt-trajectory\/","title":{"rendered":"Capital Economics gives its two cents on Saudi Arabia\u2019s public debt trajectory"},"content":{"rendered":"

Saudi Arabia\u2019s public debt could reach higher levels than previously expected by 2030:<\/strong> London-based research outfit Capital Economics sees the Kingdom's debt-to-GDP ratio reaching 50% by 2030 and 60% by 2033, with the firm expecting oil prices to see a more significant dip than the government has pencilled into its plans, Capital Economics\u2019 James Swanston said in a report seen by EnterpriseAM. <\/p>\n

IN CONTEXT- The forecast comes following the <\/strong>approval<\/a><\/strong> of the Kingdom\u2019s borrowing plan for <\/strong>FY 2025 earlier this month,<\/strong> which outlined a requirement for some SAR 139 bn in new public debt \u2014 and a subsequent USD 12 bn international bond issuance from the Finance Ministry, which was 3x oversubscribed<\/a>. The government\u2019s targeted amount for new public debt is intended to bridge an anticipated SAR 101 bn budget deficit penciled in for the new fiscal year, in addition to covering some SAR 38 bn required to meet principals\u2019 repayments for loans maturing during the period.<\/p>\n

The gov\u2019t doesn\u2019t see deficits as an inherently bad thing:<\/strong> As long as the returns on public spending exceed the cost of borrowing, deficits of SAR 100-140 bn<\/a> can be beneficial, Finance Minister Mohammed Al Jadaan told Al Arabiya late last year. The Kingdom looks to benefit from the interest rate reversal to increase borrowing, signalling fiscal expansion in 2025, 2026, and 2027.<\/p>\n

Capital Economics isn\u2019t as confident, however: <\/strong>\u201cAs things stand, the Saudi government debt burden stands at 29.6% of GDP and doesn\u2019t appear concerning \u2013 this is far lower than the EM average of around 70%. But if we\u2019re right in expecting oil prices to fall back in the coming years, and by more than the government has pencilled into its plans, the budget deficit will widen and the debt ratio will resume its rise,\u201d Swanston writes.<\/p>\n

The firm laid out multiple possible scenarios, <\/strong>which it constructed based on different possible levels of oil prices by the end of the decade. <\/p>\n