Saudi Arabia’s Finance Minister, Mohammed Al-Jadaan, has approved the 2025 annual borrowing plan, unveiling a strategic roadmap to manage the Kingdom’s funding needs. The plan received formal endorsement from the board of directors of the National Debt Management Center (NDMC), and it outlines key developments in public debt for 2024, measures to strengthen local debt markets, and the 2025 funding framework. It also includes a calendar for Saudi riyal-denominated sukuk issuances, signaling the government’s structured approach to debt management and market engagement. The plan reflects a comprehensive effort to align financing activities with broader fiscal and economic objectives, ensuring that the Kingdom maintains stable access to capital across multiple channels. The announcement underscores Saudi Arabia’s commitment to prudent debt management, disciplined borrowing, and the optimization of funding sources to support ongoing development and growth initiatives.
Overview of the 2025 Borrowing Plan
Key Endorsement and Scope
The 2025 annual borrowing plan represents a consolidated framework approved by the Minister of Finance and endorsed by the NDMC’s board of directors, highlighting the formal governance process behind the Kingdom’s debt management strategy. The plan is designed to articulate the full spectrum of public debt management activities for the upcoming year, including how 2024 developments inform future actions. It places particular emphasis on reinforcing the efficiency and resilience of local debt markets, expanding the menu of financing instruments, and laying out a clear calendar for sukuk issuances denominated in the Saudi riyal. By outlining the funding framework and its guiding principles for 2025, the plan sets expectations for market participants, policymakers, and investors about how the Kingdom intends to secure financing in the near term while maintaining strong credit metrics and fiscal credibility. The document serves as a navigational map for both public authorities and private sector stakeholders, aligning debt strategy with structural reforms, growth programs, and capital expenditure plans.
2024 Public Debt Developments
A thorough review of the public debt landscape for 2024 is a cornerstone of the 2025 plan. This retrospective assessment captures changes in debt levels, debt composition, cost of borrowing, and risk management practices observed over the past year. It identifies lessons learned from market conditions, such as interest rate environments, investor appetite, and liquidity trends, and translates them into actionable adjustments for the upcoming year. Such an analysis is essential for calibrating risk exposure, optimizing debt maturity structures, and ensuring the ongoing sustainability of the Kingdom’s debt portfolio. The plan emphasizes how 2024 outcomes feed into 2025 decision-making, including how to balance short-term financing needs with long-term fiscal stability.
Local Debt Markets and Market Development
A central pillar of the plan is the strengthening of local debt markets. This involves initiatives designed to deepen liquidity, broaden investor diversification, and improve the overall efficiency of domestic markets. Strengthening these markets is framed as a means to reduce reliance on foreign borrowing, support domestic financial sector development, and enhance resilience to external shocks. The strategy encompasses regulatory enhancements, market infrastructure improvements, transparency measures, and enhanced data dissemination to build investor confidence. By fostering a robust domestic debt market, the Kingdom aims to create a more favorable environment for sukuk issuances and other local instruments, supporting long-term funding stability.
2025 Funding Framework and Sukuk Issuances
The 2025 funding framework is articulated with a deliberate emphasis on calendarized issuance of Saudi riyal-denominated sukuk. This framework includes guidelines on issuance timing, sizing, currency preferences, and instrument structures to align with market conditions and fiscal needs. The inclusion of a sukuk calendar indicates a proactive approach to tapping Sharia-compliant financing channels while maintaining flexibility to adjust in response to market dynamics. The framework also outlines how sovereign debt management will balance consistency of access to funding with opportunities to test new markets or instrument formats as circumstances warrant. In addition to sovereign sukuk, the plan considers the potential role of other Sharia-compliant debt instruments or structured products to meet financing requirements in a compliant and efficient manner.
Strategic Focus and Principles
Underlying the 2025 borrowing plan are guiding principles that emphasize prudent risk management, fiscal discipline, transparency, and resilience. The plan highlights a balanced approach to funding that seeks to optimize cost of borrowing while preserving liquidity and flexibility. It acknowledges the importance of diversifying funding sources, engaging with both domestic and international capital markets, and leveraging innovative financing opportunities to stimulate economic growth. The document articulates a forward-looking stance on how to align debt management with broader macroeconomic objectives, including sustainable deficits, long-term investment needs, and a stable debt service profile.
Funding Requirements and Breakdown for 2025
Projected Funding Necessities
The plan projects a total funding requirement of 139 billion Saudi riyals (SR), equivalent to approximately 37 billion US dollars, for the year 2025. This figure encapsulates all anticipated borrowing needs necessary to support the government’s fiscal agenda and capital expenditure programs throughout the year. The projection reflects careful calibration to address both planned spending and macroeconomic considerations, ensuring that funding is available to sustain essential services, investment projects, and developmental priorities. The plan’s quantification of funding needs provides a precise target for debt issuance and borrowing operations, guiding market strategies and investor communications.
Deficit Coverage and Principal Repayments
The 2025 funding plan is divided into two primary components. First, there is a fiscal deficit coverage obligation of 101 billion SR, which aligns with the official budget plan and reflects the gap between projected revenues and expenditures for the year. Second, the plan accounts for 38 billion SR in principal repayments on debts maturing during 2025. This breakdown clarifies how much borrowing is required to finance ongoing deficits as well as to meet existing obligations that come due in the period. Together, these elements define the scale and composition of new debt issuance, influencing decisions about debt maturity profiles, currency choices, and the mix of funding instruments.
Implications for Debt Management and Liquidity
The stated deficit and repayment figures imply a need for careful liquidity management and a well-structured debt portfolio. Financing strategies will likely emphasize maintaining adequate cash flow and debt service capacity to avoid refinancing risk while safeguarding market access. The plan will guide the timing and sequencing of issuances to manage rollover risk, keep debt service costs predictable, and sustain positive investor sentiment. In this context, liquidity planning becomes crucial, ensuring that rollovers and coupon payments are aligned with revenue inflows and fiscal outlook. The framework also highlights the importance of aligning debt maturity structures with revenue stability, macroeconomic forecasts, and the anticipated path of interest rates.
Local versus International Financing Channels
To meet the 2025 funding needs, the plan signals a dual approach: enhancing access to both local and international financing channels. This balanced strategy aims to diversify funding sources, reduce vulnerability to shocks in any single market, and optimize debt pricing. Local channels offer advantages such as currency alignment with government revenues and support for the domestic financial sector, whereas international channels can tap a broader pool of investors and potentially favorable terms. The plan anticipates pursuing innovative financing options to augment traditional borrowing, thereby broadening the toolkit available for funding development and growth initiatives.
Instrument Mix and Market Engagement
A core element of financing strategy involves selecting a mix of instruments that best match the Kingdom’s funding requirements and risk tolerance. Sukuk will play a prominent role, given their alignment with Sharia-compliant financing preferences and their capacity to attract a diverse investor base. In addition to sukuk, the plan likely contemplates conventional debt instruments, syndicated loans, private placements, and potentially non-traditional or structured financing arrangements. The emphasis on market engagement suggests ongoing outreach to both domestic and international investors, with an eye toward favorable terms, investor confidence, and steady demand across market cycles.
Financing Strategy, Market Access, and Execution
Diversifying Funding Sources
A key objective of the borrowing plan is to diversify funding sources to strengthen resilience and reduce reliance on a narrow set of channels. By expanding access to both local and international markets, Saudi Arabia seeks to stabilize financing conditions, improve competition among lenders, and create a more robust debt management ecosystem. Diverse funding sources can help smooth issuance schedules, broaden the investor base, and support longer tenors when market conditions permit. The diversification strategy is also aligned with fiscal sustainability, promoting flexibility to respond to shifting economic environments.
Innovative Financing Opportunities
The plan emphasizes pursuing innovative financing opportunities to stimulate economic growth and fund capital projects. These opportunities can include export credit agency-backed arrangements, which provide credit risk protection and can broaden the scope of potential transactions, particularly for large infrastructure and development endeavors. Innovative financing instruments, perhaps involving public-private partnerships or linked schemes, may be explored to accelerate project delivery, optimize funding terms, and align with strategic development objectives. Such approaches can complement traditional debt issuance and enhance the overall efficiency of the Kingdom’s capital-raising activities.
Access to New Markets and Currencies
Expanding access to new markets and issuing debt in diverse currencies are potential components of the plan, contingent on favorable market conditions. Currency diversification can help mitigate exchange-rate risk and align financing with revenue streams denominated in different currencies. Accessing additional global markets can broaden investor appetite, potentially lowering borrowing costs and providing more favorable liquidity terms. The plan acknowledges that market conditions will influence the timing and structure of such issuances, underscoring the need for flexibility and prudent risk management.
Private Transactions and Infrastructure Financing
Private transactions may play a role in the funding strategy, enabling targeted and accelerated financing for key projects. This could involve privately placed debt, project finance structures, or other collaboration mechanisms with financial institutions and lenders. Infrastructure development and capital expenditure projects are highlighted as core drivers of the financing plan, reflecting the Kingdom’s emphasis on long-term investments that support growth, employment, and modernization. Private financing solutions can complement public offerings, providing additional options to meet funding needs while maintaining governance and oversight.
Governance, Oversight, and Risk Management
The execution of the borrowing plan relies on strong governance and rigorous risk management. The NDMC, along with the Ministry of Finance, is responsible for monitoring debt levels, assessing refinancing risk, and ensuring compliance with debt management objectives. Transparent reporting, data-driven decision-making, and adherence to prudent fiscal principles are integral to maintaining market trust. Ongoing risk assessment includes evaluating interest rate risk, currency risk, and liquidity risk, with adaptive measures ready to respond to changing economic conditions and market dynamics.
Implications for the Economy, Policy, and Financial Markets
Economic Growth and Investment Climate
A well-structured borrowing plan supports the broader objective of sustainable economic growth by ensuring capital is available for strategic investments. By financing infrastructure projects, human capital development, and other public investments, the plan can contribute to improved productivity, job creation, and long-term competitiveness. Efficient debt management, in turn, helps maintain favorable financing conditions and investor confidence, which can bolster the investment climate. The plan signals a readiness to align fiscal policy with growth-oriented initiatives, seeking an optimal balance between spending, revenue generation, and debt sustainability.
Debt Sustainability and Fiscal Resilience
The 2025 plan reflects a commitment to debt sustainability by outlining a clear framework for covering deficits and managing maturities. A disciplined approach to borrowing, paired with prudent expenditure controls, can help maintain sustainable debt levels and manageable debt service costs over time. The emphasis on diversification and innovation in funding further strengthens resilience against external shocks, enabling smoother adjustments to fiscal trajectories as economic conditions evolve. Maintaining a credible and sustainable debt profile remains a priority for preserving macroeconomic stability.
Local Debt Market Development and Financial Sector Strengthening
Strengthening local debt markets has far-reaching implications for the financial sector and broader economic development. A robust domestic market enhances liquidity, fosters investor confidence, and supports the growth of financial institutions. It also provides more favorable conditions for government borrowing and can contribute to the development of a broader array of financial instruments and instruments’ infrastructure. Expanded domestic market depth supports a more resilient financial system, better price discovery, and improved access to capital for public and private sector participants.
Market Confidence, Transparency, and Data Dissemination
Transparent communication and robust data disclosure underpin market confidence. The plan’s emphasis on clear guidelines for funding, maturity management, and instrument diversification helps set market expectations and facilitates informed investment decisions. Consistent reporting and performance measurement contribute to stronger governance and accountability. A transparent funding framework also enhances the Kingdom’s ability to respond to evolving macroeconomic conditions and maintain a stable debt trajectory.
Operational Details: Implementation, Timelines, and Stakeholders
Implementation Pathway
Implementing the 2025 borrowing plan involves a coordinated effort among the Ministry of Finance, the NDMC, and other relevant authorities. The process includes careful scheduling of issuances, monitoring of market conditions, and adjustments to the funding mix as needed to achieve the plan’s objectives. Operational readiness, including readiness of deal structures, settlement processes, and risk management protocols, is essential to executing the plan smoothly. The emphasis on a sukuk calendar indicates a forward-looking approach to timelines, ensuring readiness for scheduled issuances while maintaining flexibility.
Timelines and Calendar Management
The plan contains a calendar for riyal-denominated sukuk issuances, which provides a structured timeline for debt issuance activity throughout 2025. This calendar helps market participants anticipate issuance windows and align their investment strategies accordingly. It also aids in coordinating cash flow planning, liquidity management, and funding readiness for fiscal operations. The management of timelines requires ongoing collaboration among government financing teams, auditors, and market counterparties to ensure timely and compliant execution.
Stakeholder Coordination
Effective debt management depends on seamless coordination among central government entities, financial institutions, and investors. Stakeholders must engage in ongoing dialogue to align on terms, market expectations, and financing conditions. Regular updates and performance reviews support continuous improvement and responsiveness to changing market dynamics. Stakeholder engagement also helps ensure that the plan remains aligned with broader economic goals and fiscal constraints.
Compliance, Risk Controls, and Monitoring
Compliance with debt management policies and risk controls remains central to the execution of the plan. Monitoring tools, analytics, and governance frameworks enable proactive identification of emerging risks and timely mitigation measures. The NDMC’s oversight plays a critical role in tracking debt stock, maturities, and exposure across currencies and instruments. Regular risk assessments and adaptive strategies help maintain a stable debt profile while supporting prudent fiscal stewardship.
Conclusion
Saudi Arabia’s 2025 annual borrowing plan, approved by the Finance Minister and endorsed by the NDMC, sets out a comprehensive framework for managing public debt, developing local debt markets, and funding the Kingdom’s development agenda. With a projected funding requirement of 139 billion SR for 2025, comprising a 101 billion SR deficit and 38 billion SR in principal repayments, the plan outlines a balanced strategy to access both local and international financing channels, explore innovative financing options, and issue riyal-denominated sukuk on a structured calendar. Through diversified funding sources, market development initiatives, and a focus on risk management, the plan aims to strengthen fiscal resilience, support infrastructure and capital expenditure, and sustain growth over the medium term. The coordinated effort reflects a commitment to transparency, governance, and prudent debt management as the Kingdom advances its macroeconomic objectives and financial market development.
