Saudi budget preliminary statement: Public debt approaches SR 1 trillion by 2023-end

The Ministry of Finance issued a preliminary statement for ‎the Saudi budget for the year 2023, which expected the total ‎public debt to reach SR 985 billion by the end of 2022. ‎This volume of debt is higher than the levels estimated in the ‎budget, which was announced last December. The Ministry ‎of Finance returned the matter to the completion of pre-‎financing operations to reduce the volume of borrowing ‎financing needs for the next year 2023 and to complete ‎part of the alternative government financing operations ‎during the year, noting – i.e. the ministry – that the fiscal ‎policy aims to strengthen the financial position of the ‎government by maintaining safe levels of government ‎reserves to enhance the Kingdom’s ability to deal with ‎external shocks.‎

According to the statement, the GDP will grow 8% by the end ‎of this year 2022, and will reach 3.1% in the year 2023, and ‎‎6% in the year 2024, to reach 5.4% in the year 2025. ‎Moreover, inflation will reach 2.6% by the end of 2022, it will ‎decrease to 2.1% in 2023, and there will be a higher ceiling ‎for the debt level during the coming period that will not be ‎exceeded.‎

This is in addition to focusing on debt issues with fixed ‎returns starting from the year 2021 AD to mitigate the risks of ‎variable returns, and to meet the Kingdom’s needs for ‎financing, the Ministry of Finance is working in cooperation ‎with the National Center for Debt Management to prepare ‎an annual plan for borrowing, according to the medium-term ‎debt strategy, which aims to diversify sources of financing ‎between local and external and access global debt markets ‎within well-studied frameworks and foundations for risk ‎management. This strategy also takes into account the ‎objectives of the Kingdom’s Vision 2030 in promoting the ‎growth of the financial sector and deepening the local debt ‎market. The strategy also aims to diversify financing tools ‎between the issuance of bonds, sukuk and loans, in addition ‎to continuing research into new financing markets and ‎methodologies through alternative government financing, ‎which comes within the ministry’s strategy to support the ‎continuity and completion of major development projects in ‎the Kingdom.‎

It is noteworthy that the public debt of the Kingdom of Saudi ‎Arabia rose to 966.519 billion riyals at the end of the first half ‎of this year, an increase of 28.509 billion riyals from its levels ‎at the end of 2021, which was 938.01 billion riyals. The ‎increase came from local issuances and borrowings, ‎amounting to 83.008 billion riyals during the first 6 months of ‎‎2022, while about 36.997 billion riyals of the principal debt ‎were repaid during the same period.‎

The level of external debt decreased to 361.761 billion riyals, ‎a decline of 17.502 billion riyals from its levels at the end of ‎‎2021, which was 379.263, which means that the government ‎did not issue any international debts during the first half of ‎this year, but rather paid 17.5 billion riyals of external debts. ‎