By Aseel bin Talib

Riyadh-Mubasher: Saudi banks have boosted their capital and thus became able to lend the government and finance projects, said Abdullah Al-Maghlouth, economic consultant and member of Investments and Securities Committee at Riyadh Chamber of Commerce.

He told Mubasher that the local lenders are aware that the government will borrow from them if it faces budget deficit on tumbling oil prices.

“Investment in bonds is feasible for banks, as they will receive fixed interests. The government aims to benefit from the banks’ excess liquidity, and no doubt that this investment will boost the lenders’ operations,” Al-Maghlouth said.

This is not the first time for the kingdom to issue treasury bills, the expert said, adding that bonds are one of the investment channels which the government relies on to cover debts or finance development projects.

“Bond investment is a low-risk financing channel offering safe yields to investors, and thus investors can diversify risks through bonds,” Al-Maghlouth said.

He indicated that the bonds will be issued to face the potential budget deficit, as the International Monetary Fund (IMF) expected the kingdom’s deficit to reach SAR 560 billion.

When asked whether the government will issue sukuk, the consultant said the bond issue is a simple procedure which all banks can take, adding that Al-Rajhi Bank, Albilad Bank, AlJazira Bank, Alinma Bank and Saudi Investment Bank have reservations about participating in the bond issue.

Translated by Abdul Maguid Aboshahla