EqualOcean has learned that Saudi Arabia, one of the largest debt issuers in emerging markets in 2024, has kicked off its debt financing activities for 2025, aiming to fund its expansive economic diversification and social reform initiatives.
On January 5, the Saudi National Debt Management Center (NDMC) issued a statement revealing that the kingdom’s funding needs for 2025 are estimated to reach approximately SAR 139 billion (around USD 37 billion). Of this amount, SAR 101 billion will be allocated to cover the budget deficit, with the remaining funds set aside for debt repayments. The following day, Saudi Arabia issued USD 12 billion in bonds, while its sovereign wealth fund secured USD 7 billion in Islamic loans from a consortium of 20 banks.
This debt issuance is closely tied to Saudi Arabia’s ambitious "Vision 2030" plan, which seeks to reduce the country’s dependence on oil revenues by driving economic diversification and social transformation. Since Crown Prince Mohammed bin Salman unveiled the plan in 2016, the government has invested billions of dollars in a series of large-scale projects, including NEOM (a futuristic city), the Red Sea project, and other initiatives designed to attract international investment. At the same time, Saudi Arabia has been focusing on developing high-tech industries, renewable energy, and a broad array of sectors such as sports, culture, and entertainment to enhance its global image and boost tourism.
While diversifying its economy, Saudi Arabia’s fiscal situation remains susceptible to global oil price fluctuations. According to the International Monetary Fund (IMF), Brent crude is currently trading at around USD 76 per barrel, while the kingdom needs oil prices to exceed USD 90 per barrel to balance its 2025 government budget. To alleviate fiscal pressures, state-owned oil giant Saudi Aramco has raised the price of its crude oil sold to Asian markets.
Despite facing challenges such as budget deficits and oil price volatility, Saudi Arabia’s strong balance sheet and liquidity position have been recognized by international credit rating agencies. In November 2023, Moody’s upgraded Saudi Arabia’s credit rating from A1 to Aa3, aligning it with the ratings of France and the United Kingdom. The agency cited the optimistic outlook for Saudi Arabia’s non-oil sector, particularly as the kingdom continues to make strides in its economic transformation.
Picture Source: NEOM