By Dylan Bowman
Net borrowing to climb to $23bn due to reduction in debt repayment, Standard & Poor's says.
Government borrowing in the Middle East and Africa (MEA) is set to more than triple this year due to a reduction in debt repayment led by Saudi Arabia, Standard & Poor's said on Monday.
The ratings agency said in its annual sovereign issuance survey that net borrowing was forecast to climb sharply to $23 billion this year from $7 billion in 2007.
The agency said Saudi was expected to slow down its repayments of domestic debt substantially, accounting for almost $20 billion of the net increase alone.
The increase also reflects a rise borrowing requirements, it added.
"...borrowing in 2008 is mainly to finance amortisations, provide benchmark issues, and maintain a level of government debt necessary for monetary policy purposes,” said Standard & Poor’s credit analyst Farouk Soussa.
The agency said it expected MEA sovereign commercial medium- and long-term borrowing to be $77.6 billion in 2008, up from the $57 billion last year.
Of this, $54.2 billion is required to refinance existing maturing debt, with the remaining $23.4 billion reflecting new debt, the agency said.
Despite the increase in borrowing, it said total new debt still only accounted for 1.1% of the combined gross domestic product (GDP) of rated sovereigns.