Saudi Arabia to Tap Global Markets with $12.6 Billion Bond Issuance Amid Economic Overhaul

Saudi Arabia is set to issue $12.6 billion in bonds by the end of 2025, as the kingdom intensifies efforts to finance its ambitious economic transformation under Vision 2030. This move comes amid a projected budget deficit of $26.9 billion for the year, driven by substantial investments aimed at diversifying the economy away from oil dependency.

The planned bond issuance underscores the government's strategy to leverage debt markets to support large-scale projects in sectors such as tourism, manufacturing, and technology. Despite a decline in oil revenues, which fell by 18% in the first quarter of 2025 compared to the same period the previous year, Saudi Arabia maintains a relatively low debt-to-GDP ratio of approximately 29.9% as of December 2024.

Finance Minister Mohammed Al-Jadaan has emphasized the importance of maintaining fiscal discipline while continuing to invest in non-oil sectors. He noted that moderate deficits are acceptable if they contribute to sustainable economic growth. The International Monetary Fund projects Saudi Arabia's budget deficit to exceed 4% of GDP in 2025, surpassing the government's target of 2.3%.

Vision 2030, spearheaded by Crown Prince Mohammed bin Salman, aims to transform the Saudi economy through initiatives such as the Red Sea Project and the Diriyah Gate cultural district. These projects are designed to boost tourism, with the goal of attracting over 150 million visitors by 2030. The government is also investing heavily in technology and renewable energy sectors to create a more resilient and diversified economic landscape.

In addition to bond issuance, Saudi Arabia has been proactive in engaging with international investors to fund its megaprojects. The kingdom's total outstanding direct indebtedness reached $354.3 billion by the end of March 2025, comprising both domestic and external debt. This approach reflects a broader strategy to balance the need for economic diversification with prudent fiscal management.