Saudi Arabia sets public debt ceiling at 30% of GDP by 2020

Saudi Arabia has set the public debt ceiling at 30 percent of gross domestic product (GDP) by 2020, the national budget showed.

Accordingly, the current public debt could more than double in the next four years, assuming a positive rise in annual GDP.

The medium-term public debt strategy set by the 2017 budget is based on five main points, under which the target debt will be attained while maintaining the kingdom’s credit rating at “AA2”.

The kingdom’s borrowing or annual public debt until 2020 should depend on borrowing needs and the capacity of local and global markets.

The strategy is also aimed at tapping various international markets and financing instruments, along with the diversification of financing channels.

Saudi Arabia will also diversify debt instruments and issue new Shariah-compliant ones locally and overseas.

Debts will be denominated in various currencies, based on market conditions.

The Saudi public debt rose to SAR 316.5 billion by the end of 2016, accounting for 12.3 percent of GDP, compared to SAR 142 billion in 2015, according to the kingdom’s 2017 budget.   

Debt service in 2016 was estimated at SAR 5.4 billion and is projected to increase to SAR 9.3 billion in 2017.