Saudi Arabia Seeks $8 Billion in Loans Amid War Strain

The Government of Saudi Arabia is in early discussions to raise at least $8 billion through new loans to diversify its funding sources. The National Debt Management Center and state-backed oil giant Saudi Aramco have begun sounding out banks for these potential deals, though officials cautioned that the transactions are in early stages and may not materialize.

This borrowing effort follows significant economic strain caused by a regional war with Iran, which disrupted trade through the Strait of Hormuz. The conflict contributed to a nearly 25% slump in the oil sector during the second quarter. Despite higher oil prices providing some relief, the kingdom reported a second-quarter deficit of 34.3 billion riyals, or approximately $9.1 billion.

The strategy aims to tap non-market capital to sustain Crown Prince Mohammed bin Salman’s economic diversification plans and various ambitious mega-projects. This move aligns with a broader effort to rely more on outside capital and divest mature assets to maintain financial stability during the ongoing conflict.