Lenders may need to issue at least $11.5 billion in bonds in local and foreign currencies, according to Bloomberg Intelligence, to raise funds for Vision 2030, a plan aimed at transforming Saudi Arabia from an oil-reliant economy to one generating income from everything from tourism to technology. That would be a new high, surpassing the $10 billion raised in 2022.
The sheer size of the required investment, coupled with slower deposit growth at the kingdom’s banks and a lack of foreign investment into Saudi Arabia, means lenders will need to lean heavily on borrowing to come up with funds for mega projects such as urban development Neom and entertainment city Qiddiya, according to Riyadh-based Jadwa Investment Co.
“The one issue which I think is the most troubling for the whole Vision 2030 project is the lack of capital,” said James Reeve, the former chief economist at Jadwa who has since been hired by Saudi Arabia’s sovereign wealth fund. “The Saudi banking system is kind of tapped out.”
Saudi Arabia’s lenders have been grappling with tighter liquidity as loan growth has outstripped deposits to support a domestic economy that contracted last year. The country will require $640 billion in construction spending over the next five years based on the current pipeline of projects, according to data compiled by Dubai-based analysis firm MEED Projects. That suggests banks may need to come up with almost $384 billion over that period if they fund 60% of the pipeline, using a mix of more deposits and debt.
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