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Saudi Arabia to take $3.46bn from state reserves to finance budget deficit

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
This file picture shows Saudi Arabian five-hundred riyal notes.

A high-ranking Saudi economic official says the oil-rich kingdom is going to draw down a total of 13 billion Saudi riyals ($ 3.46 billion) from the general reserves over the current year in a bid to close its budget deficit.

Head of the Debt Management Office at the Saudi Ministry of Finance, Fahad al-Saif, said on Tuesday that with expectations for a deficit of 131 billion riyals ($34.92 billion), or 4.2 percent of gross domestic product, the volume of borrowing throughout 2019 will reach 118 billion riyals ($31.45 billion), Arabic-language Maaal financial daily reported.

He went on to say that Saudi Arabia intends to issue bonds worth billions of riyals this year – the first of which were out on January 20.

Saif highlighted that the last monthly issuance will take place on December 22, describing the measure as in line with Saudi Vision 2030, which aims to reduce the country’s dependence on oil, diversify its economy, and develop public service sectors.

Riyadh has already withdrawn hundreds of billions of dollars from its reserves and borrowed tens of billions of dollars from the domestic and international markets to plug the budget deficit.

The kingdom has posted budget deficits totaling more than $260 billion since the 2014 crash in crude oil prices.

The world's top crude exporter announced late last September that it expects to balance its budget by 2023, as oil prices rebound and it will diversify the sources of income and consolidate fiscal sustainability through boosting non-oil revenues.

"The deficit is expected to continue to decline gradually over the medium term... until it reaches the fiscal balance by 2023," claimed Saad al-Shahrani, head of the finance ministry's fiscal policy department, in a statement carried by the official Saudi Press Agency.


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