Finance Minister Mohammed Al-Jadaan said the kingdom has no plans to resort to international debt markets again this year; It tends to borrow locally to cover the budget deficit, which is estimated, according to initial estimates, at about 298 billion riyals. Al-Jadaan said in an interview with “Bloomberg” TV yesterday: We went to the local market significantly this year; We will likely do it again next year; Adding that «there are no plans currently for an international issuance». He expected that the local spending of the Public Investment Fund would contribute to strengthening the local economy in the coming years. His Highness the Crown Prince recently indicated that the fund intends to invest 150 billion riyals annually for two years, while its assets are expected to reach 400 billion dollars by the end of this year. Banks operating in the Kingdom bought government bonds in the current year until the end of September, at more than 45.5 billion riyals, an increase of 11.87% over their total investments in government bonds by the end of 2019.
The cumulative investments of banks in government bonds, based on recent data from the Monetary Agency (SAMA), rose to 429.21 billion riyals by the end of the third quarter of 2020, compared to 383.67 billion riyals at the end of last year. The volume of public debt at the end of the third quarter of this year was about 847.8 billion riyals, compared to 819.9 billion riyals in the second quarter. According to the estimates of the Ministry of Finance, it is expected that the public debt for the current year will reach 854 billion riyals, in light of the Corona crisis, for the sake of financial sustainability, which preserves the gains, ensures the continuity and sustainability of economic growth and progress and provides basic requirements for citizens. “Saudi Arabia has the solvency to deal with this crisis and to keep the deficit under control,” said Mohammed Al-Jadaan, Minister of Finance, earlier.
Bonds are one of the long-term public debt instruments that countries resort to to finance the budget deficit, and are distinguished from being tax-exempt, and bondholders have priority over shareholders when dividing the company’s assets in case of liquidation, and the bondholder has the right to file the bankruptcy of the issuing company when it fails to comply with it. By fulfilling the requirements of the bond service.