Believe it or Not Saudi Arabia need cash to support her budget deficit and meet the required target for financial stability.
The Islamic kingdom’s sale of Islamic bonds worth nearly $9 billion second time with in six months after the first time by selling $17.5 billion in conventional bonds.
Half of the Bond will mature in Five years whereas remaining will mature in ten years.
A global bond for fund raising is not at all a problem for KSA as oil is still a basic need for moving the civilization and this fund will help kingdom’s massive budget surplus into a gaping hole. Which was unheard of story in just five years it is a reality now that oil-rich Saudi Arabia would need to borrow money from abroad.
Saudi Arabia said in December it’s budget deficit for this year will reach 198 billion riyals ($53 billion), or 7.7% of its GDP. National plan is to narrow the gap by issuing debt and tapping its foreign reserves as and when required.
KSA government had received bids worth $33 billion for the new debt. The “sukuk” bonds, which adheres to the rules of Islamic principles and will not allow the payment of interest.
KSA is also planning to raise fund from Oil IPO by 2018 and world is looking into it with all possible interest in oil politics.
If global oil price continues to shrink then more such story will generate in Oil blocks else where in the wold as well.
Middle East is in a twilight saga of financial management reform; fiscal and debt management will be a tough call for the citizen and expats working as freebies offers will be removed in near future as anticipated by economic experts.
With inputs from : Mr. Kajal Bhattacharjee, Editor Middle East and USA