Saudi Arabia seeks $8 billion in loans amid economic pressures

Saudi Arabia is in preliminary discussions with banks to secure at least $8 billion in loans as the kingdom seeks to diversify its financing sources. The National Debt Management Centre (NDMC), which operates under the Saudi Finance Ministry, has approached banks to assess interest in a potential transaction. Additionally, the state-controlled oil giant Saudi Aramco is reportedly engaged in similar early-stage discussions.

The potential borrowing comes amid significant economic pressures caused by regional conflict. Disruptions in the Strait of Hormuz and threats to vessels in the Red Sea by Iran-backed Houthi forces have increased import costs and complicated oil export strategies. These tensions have impacted the kingdom's economy, which saw its fastest contraction since the pandemic in the second quarter, driven in part by a nearly 25% shrinkage in the oil sector.

While higher oil prices, averaging around $87 per barrel for Brent crude this year, have provided some fiscal support, the kingdom still faces budgetary challenges, including a second-quarter deficit.