Saudi to issue SAR120bn of bonds in 2019

Saudi Arabia plans to issue around SAR120bn ($32bn) of bonds next year to help finance its deficit, according to reports.

The government unveiled a SAR1.11 trillion ($295bn) budget on Tuesday, the kingdom’s largest ever, with a 7 per cent increase in state spending to spur economic growth.

Some analysts speculated this could widen the kingdom’s deficit to more than 7 per cent from the 4.2 per cent forecast by the government.

Read: Saudi boosts spending in 2019 budget to spur sluggish economy

Mohammed Al-Jadaan told Bloomberg TV on Wednesday that the kingdom planned to issue international bonds in dollars and other currencies, with the exact timing dependent on market conditions.

“We now have access to a wider network of investors in the US, which is the primary market, but also in Europe and Asia,” he was quoted as saying.

“So we are expanding and we are likely to go to the international markets early next year.”

The minister said controversy surrounding the October 2 murder of Saudi journalist Jamal Khashoggi at the kingdom’s Istanbul consulate had not affected foreign investment.

“I haven’t seen foreign investment or local investment changing, to the contrary,” he said, adding that the kingdom’s inclusion in MSCI’s emerging markets index next year will help it attract new inflows.

Read: Franklin Templeton sees “growing potential” in Saudi despite Khashoggi controversy

Bloomberg Economics Middle East economist Ziad Daoud said the government’s budget calculation may be based on crude prices as high as $80 a barrel.

Al-Jadaan declined to disclose the kingdom’s price forecast but told Reuters on Wednesday that the kingdom’s 2023 target to balance the budget was flexible.

“What’s the point of having a balanced budget on 23 specifically? It could be 22, it could be 24. We want to be disciplined, we want to be efficient and pro-growth,” he said.

Read: Saudi says ‘comfortable’ with oil prices as it reveals its largest ever budget