Total financing needs for 2024 are at SAR 21 bn -NDMC report

The sovereign debt-to-GDP ratio is expected to rise 0.8 percentage points y-o-y to 26.2% in 2024, according to the latest National Debt Management Center (NDMC) figures (pdf). The data indicates sovereign debt will reach SAR 1.12 tn by the end of 2024.

Total financing needs for 2024: The budget deficit is expected to amount to SAR 79 bn by the end of this fiscal year, leaving the government short of SAR 86 bn in total financing needs.

In context: The Finance Ministry is targeting a deficit of SAR 79 bn (1.9% of GDP) in the current fiscal year with plans to continue to run deficits in the medium term to support the government’s strategic spending and investment plans, according to the budget statement (pdf). “We intentionally decided to spend more and cause the deficit. If you spend that money right, on productive assets, then it’s money well spent,” Finance Minister Mohamed Al Jaadan said back in December, when he unveiled the government’s 2024 spending plans.

Market conditions will inform the 2024 financing plan: NDMC will continue to “identify and pursue favorable market” conditions with expectations that up to 35% of the total financing needs will come from the domestic debt market, while up to 40% will be covered through tapping international debt markets, and the government Alternative Funding (GAF) will cover up to 50%.

Last year in review: The government borrowed a total of SAR 198 bn last year, with SAR 88 bn coming from the domestic debt market, and the rest sourced internationally.

Refinancing sukuk: The government has redeemed SAR 36 bn in sukuk with maturities in 2024, 2025, and 2026 — slashing this year’s maturities to SAR 21 bn, from SAR 40 bn. This is part of NDMC’s liability management transactions, which include refinancing sukuk — buying back bonds whose maturities are approaching and issuing fresh bonds with extended maturities to hedge against future refinancing risks. The debt portfolio’s average time to maturity is currently at 9.5 years. (You can find the 2024 calendar for upcoming sukuk issuances here.)