Saudi Arabia is going to sell debt in the form of local and international bonds to shore up its public finances in the first sign that the persistently low oil price is taking its toll on the kingdom's economy.
Saudi officials have told the Financial Times that the kingdom may increase public debt to as much as 50 per cent of GDP within five years (which is still far below most Western economies).
The measure comes after a big fall in Saudi Arabia's foreign exchange reserves, which have been hit by the oil price falling by more than half in the last year.
A senior official told the FT that Saudi Arabia was not in crisis. “We can borrow, we have reserves, we are working on a revenue generation programme," the official said.
But the bond programme will please the International Monetary Fund, which has said Saudi Arabia should diversify its economy away from its dependence on oil.
Saudi officials have said that the kingdom will keep pumping oil despite a global oversupply in order to protect its market share.
The IMF has predicted that Saudi Arabia could run out of cash reserves within five years if it does not address its reliance on oil.
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