With crude oil prices falling, Saudi Arabia turns to debt to pursue major projects

After oil, the rush to debt. The drop in the price of black gold, precipitated by the decision of the countries of the Organization of the Petroleum Exporting Countries and their allies on May 3 to open the floodgates of their production , is pushing Saudi Arabia to borrow to finance its colossal projects, linked to the Vision 2030 economic diversification plan. With the price of a barrel expected to rise to nearly $50 (€45) in 2025 and 2026, according to forecasts by the firm Capital Economics, while it was close to $100 in 2022, the kingdom must look elsewhere for money.

With 61% of its tax revenue coming from oil wealth, Saudi Arabia can still borrow massively. In 2024, the country already borrowed $17 billion on the markets through sovereign bond issuance, the highest amount for an emerging country. The rating agency S&P Global Ratings estimates that the Saudi government and the wealthy sovereign wealth fund Public Investment Fund (PIF) will borrow an additional $60 billion each year between 2025 and 2028, equivalent to 4.9% of gross domestic product (GDP), which will cause external debt to jump from 29% of GDP in 2023 to 45% in 2028. In 2014, it was only 1.5%.

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