Saudi external debt growth continues to show strength as external debt rises. The increase comes as part of the nation’s Vision 2030 push, which drives large-scale investments and financing needs. Despite the challenges, the sector remains well-positioned to manage financial risks.
The Saudi external debt growth stems from short-term instruments like interbank deposits and international bond issuances. While loans from banks surged significantly, deposit growth lagged, creating a funding gap.
To address this, Saudi banks increased reliance on global capital markets.Nevertheless, the banking system still holds strong fundamentals. The total net external debt represents only a small fraction of overall lending. Banks continue to control risk effectively through balanced funding strategies.
Moreover, Gulf region liquidity supports Saudi institutions, as nearly half of the foreign deposits originate from GCC countries. International banks still provide much of the external funding. Around 59 percent of Saudi external debt links to foreign lenders, which raises some concerns due to shorter maturities.
However, Saudi banks prepare for such scenarios by maintaining sound financial buffers.Saudi Arabia’s government has also demonstrated consistent backing for the banking sector. Market analysts expect immediate support if banks face any liquidity crunch. This trust ensures that investors remain confident in the system.
Additionally, Saudi external debt growth the banking sector explores other financing tools to increase flexibility. Some banks have started selling mortgage assets to free up capacity. The Saudi Real Estate Refinance Company has already purchased a notable volume of home loans.
These transactions help improve bank liquidity without increasing risk exposure. Though the market for mortgage-backed securities remains small, it may expand soon. Banks approach this option cautiously because of profitability concerns and investor skepticism. However, experts see potential growth in this area, especially as financial awareness improves.
Importantly, the size of Saudi Arabia’s banking system helps reduce vulnerability. The country holds larger total assets than many regional peers. This strength gives banks more ability to absorb debt shocks without major disruptions.
Looking ahead, Saudi external debt growth the Saudi external debt growth will likely continue. Yet, the sector’s strong position, government support, and growing financial tools will help manage this increase. Saudi banks appear ready to meet the demands of Vision 2030 without compromising stability.
