Saudi Arabia intends to issue around 120 billion riyals ($32 billion or Dh117.5 billion) of bonds next year to help finance its deficit, with plans to tap international markets in the first half, Finance Minister Mohammed Al Jadaan said.

The kingdom is considering international bonds in dollars and other currencies, Al Jadaan told Bloomberg TV in Riyadh on Wednesday.

The exact timing of the issuances will depend on market conditions. The minister didn’t break down the total into local and international debt.

“We now have access to a wider network of investors in the US, which is the primary market, but also in Europe and Asia,” Al Jadaan said. “So we are expanding and are likely to go to the international markets early next year.”

The world’s largest crude exporter on Tuesday released its budget for 2019, with expectations for a deficit of 131 billion riyals, or 4.2 per cent of gross domestic product. Saudi Arabia issued international bonds for the first time in 2016 as part of Crown Prince Mohammad Bin Salman’s economic overhaul to prepare the kingdom for life after oil.

The 2019 budget included a 7 per cent boost to spending and extended extra benefit payments for government employees worth billions of dollars for another year. It projected revenues of 975 billion riyals next year, with 662 billion riyals coming from oil.

The revenue forecast surprised some analysts who said it was based on a relatively high price of oil at a time when crude prices are falling.

Domestic energy

The projection defies “the laws of arithmetic,” said Ziad Daoud, the Dubai-based chief Middle East economist at Bloomberg Economics, who estimates the government’s calculations may be based on a crude price as high as $80 a barrel. The global Brent benchmark traded below $57 on Wednesday.

Al Jadaan said Saudi Arabia can’t disclose its oil price assumption, but said that he believes “the numbers that we have in the budget are reasonable.”

The minister said energy prices other than for quarterly-reviewed gasoline are unlikely to change in 2019. Increases in the last two years had a greater than expected impact on consumption, he said. Lowering energy subsidies is a key part of the crown prince’s reform plan.