Saudi Arabia is reportedly looking to borrow $10bn in its first international loans in a decade

Saudi's shock loan request signals that the kingdom looking at other ways to finance its economy

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The Independent Online

Saudi Arabia is reportedly looking for loans worth $10 billion from international lenders in its most significant foreign borrowing in a decade.

The Saudi Arabian government is said to have sent an invitation to banks to discuss a US dollar loan.

While the invitation did not specify an amount, sources said it could be worth $10 billion or more.

Calls to the Saudi finance ministry and central bank seeking comment were not immediately returned.

Saudi's shock loan request signals that the kingdom looking at other ways to finance its economy after the oil price slump.

Chart: Statista

It has already raised domestic petrol prices by up to 40 per cent as part of a raft of measures brought in to address a record budget deficit of $100 billion in 2015.

Subsidies for water, electricity and petrol are expected to be dismantled over the next five years. The kingdom has traditionally kept prices low for residents as a social welfare measure.

Changes to VAT and an increase in taxes on soft drinks and tobacco are also planned. 

Before the oil price started falling in mid-2014, Saudi Arabia, like many other oil-reliant Gulf states, paid down Government debt and borrowed little from international banks. 

Many states are expected to increase their borrowing sharply as they reach the limits of how much they can fund themselves through domestic borrowing.

Qatar borrowed $5.5 billion in January, around the same time the government of Oman borrowed $1 billion through an international loan.

Additional reporting by Reuters