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The Saudi Arabian Monetary Agency (SAMA) is considering further borrowing from the domestic market to plug its growing budget deficit, as oil prices remain depressed. According to a 6 August Financial Times report, bankers say that the kingdom is sounding out demand for the issue of local debt at the rate of SR20bn ($5.3bn) per month until the end of the year.
Last month SAMA’s Governor Fahd al-Mubarak revealed that the government had raised SR15bn ($4bn) in debt from the domestic market to cover the budget deficit in the early part of 2015.
Mr Mubarak then said that he expects to borrow locally to cover increased government spending. MEES estimates that Saudi Arabia is set to run a deficit of SR400bn ($107bn) for 2015 as a whole (MEES, 17 July). Saudi banks are known to have adequate liquidity to allow them to acquire government bonds which would have maturities of five, seven or ten years.
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