|12-29-2014, 10:24 PM||#1|
Saudi deficit financing to be discussed with central bank, Finance Minister says
The Saudi Arabia Finance Ministry is set to explore its options for financing the expected large budget deficit next year with the Saudi Arabia Monetary Agency (SAMA), the kingdoms central bank, Finance Minister Ibrahim Alassaf said.
On Thursday, the Finance Ministry announced its 2015 fiscal budget, which projected a SAR145 billion ($38.7 billion) deficit, mostly due to lower oil prices.
The statement of the ministry that followed the budget statement said the deficit could be covered from fiscal reserves, but Alassaf added later that borrowing is on the table.
“There is also a chance to borrow at good rates – this topic will be discussed with colleagues at the Saudi Arabian Monetary Agency (SAMA) at the appropriate time,” he said.
However, Alassaf did not detail on what type of borrowing could be used.
Saudi state-run agencies and firms usually issue local- and foreign-currency bonds, but the government does not do that, as it always prefers to pay down its debt.
Saudi Arabia’s public debt was 1.6% of gross domestic product or SAR44 billion, a very small number that make it remarkably easy to borrow.
The government can borrow from both private financial institutions and state-run institutions as they have big resources.
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