Saudi Arabia, predominantly reliant on oil revenue, is under increasing pressure to address the recent drop in oil prices. This situation has forced them to consider raising debt or reducing spending, impacting their ambitious plans to diversify the economy. The decline in oil prices, attributed to global growth concerns and increased oil production by OPEC+ members like Saudi Arabia, poses a serious threat to Saudi revenue and dividends from Saudi Aramco, the state-owned energy company.

To fund its Vision 2030 initiative, which aims to lessen the nation's dependency on oil, Saudi Arabia needs significant investments in infrastructure projects. However, these projects are facing financial challenges due to the falling oil prices. The country may need to resort to debt financing and potentially scale back contracted projects to tackle its fiscal and current account deficits.

Analysts anticipate a substantial increase in Saudi public debt in the coming years. The country's revenue heavily relies on oil, with a significant portion coming from Aramco. As a result of reduced dividends, the government and the Public Investment Fund (PIF) are set to receive significantly less income. PIF, a key driver of Vision 2030, is projected to require additional financing to meet its investment goals.

In response to the fiscal challenges, Saudi Arabia has ramped up its borrowing activities, issuing bonds to raise funds. PIF, after borrowing large sums through bonds and loans last year, is expected to seek further financing. The government and other state-linked entities have also turned to the bond market to secure necessary funds for their operations and investment plans.