Riyadh: Saudi Arabia has issued bonds worth 15 billion riyals (Dh14.69 billion, $4 billion) to local banks this year to finance its budget deficit, its central bank governor was quoted saying by al-Iqtisadiya daily on Friday.
The bonds will help pay for a budget deficit now forecast to exceed the 145 billion riyals previously expected, Fahad al-Mubarak, Saudi Arabian Monetary Agency (SAMA) governor was quoted by al-Iqtisadiya as telling a news conference on Thursday.
He added that Riyadh had already withdrawn 244 billion riyals from reserves in 2015 and that further bonds were likely to help finance the deficit, the first anticipated since 2009 on the back of falling oil revenue.
“We will see increased borrowing in the coming months ... facing (the) deficit will be through withdrawing from reserves and borrowing via bond issues,” he was quoted as saying.
SAMA serves as the country’s sovereign wealth fund.
According to its own data, net foreign assets fell to 2.521 trillion riyals ($672.2 billion) in May, down by $6.6 billion from the previous month as it drew down reserves to cover the budget deficit.
In December, Finance Minister Ibrahim Alassaf said his ministry would discuss with the central bank its options for financing the large state budget deficit expected this year, and said some might be covered by borrowing.
Saudi gross domestic product, adjusted for inflation, grew 2.4 per cent in the first quarter of 2015 from a year earlier, compared to a revised 1.6 per cent expansion in the previous quarter from the prior-year period, according to data from the Central Department for Statistics.
