Banks operating in the Kingdom increased their investments in government bonds by 14.69% by the end of 2020 on an annual basis, with an increase of 56.34 billion riyals over their cumulative investments at the end of the previous year. According to SAMA statistics, banks ’cumulative investments in government bonds reached 440.02 billion riyals at the end of December 2020, compared to their value of 383.67 billion riyals at the end of the same month of 2019.
Banks bought government bonds worth more than 10 billion riyals during the month of December of 2020, a monthly increase of 2.3% compared to its value at the end of last November which amounted to 430.01 billion riyals. Bank investments in government bonds increased by about 2.5% during the fourth quarter compared to their value at the end of the quarter. On December 25, the National Debt Management Center announced the completion of the financing plan for the year 2020 with a total value of 220 billion riyals. Bank investments in government bonds accounted for 84.75% of the total bank liabilities in the Kingdom from the public sector (government and semi-government) by the end of 2020.
Total bank liabilities from the public sector amounted to 519.17 billion riyals at the end of last year, compared to a value of 445.32 billion riyals at the end of 2019, an increase of 16.59%, equivalent to 73.86 billion riyals.
Bonds are known as a long-term public debt tool that states resort to to finance the budget deficit, while sovereign sukuk are defined as a debt instrument issued by the state to collect funds that they use to bridge the deficit, and prove the right of ownership to their holders in assets.