In the heart of Gulf markets,where mega-project ambitions collide with oil-price volatility,debt issuance has been steadily increasing to support evolving economic priorities. Gulf states are no longer passive recipients of capital; they have become calculated, strategic players in the global debt arena, seeking liquidity, broadening their investor base, and balancing aggressive development plans with emerging risks.

Against this backdrop, Dr. Khaled Ramadan, economist and head of the International Center for Strategic Studies in Cairo, told Annahar that the rise in Gulf debt issuance is driven by more than numbers. It reflects a deliberate strategy to confront financing pressures head-on while safeguarding the region’s financial stability.

Dr. Ramadan explained that the main driver behind rising debt levels is robust credit growth. Countries like Saudi Arabia and the UAE are experiencing surging demand for financing large-scale projects, pushing both banks and governments to turn to external borrowing to keep pace. He added that the global shift toward looser monetary policy is amplifying this momentum. With the U.S. Federal Reserve’s cut in interest rates, borrowing costs are projected to fall—making debt issuance more attractive and fueling a new wave of bonds entering the market.

He stressed that upcoming debt maturities—totaling $36 billion between 2025 and 2026—are pushing governments toward refinancing and fresh issuance. The limited liquidity available in local banks, he noted, is further increasing reliance on international markets. He added that the surge in bond issuance, which now represents roughly 50% of total Gulf debt, is being propelled by strong investor appetite and the appeal of competitive yields.

The expected decline in oil prices—to around $70 per barrel in 2025 and $65 in 2026—will nevertheless strain government revenues, pushing Gulf states, particularly Saudi Arabia and Bahrain, to ramp up borrowing to meet fisacal needs. Dr. Ramadan explained that the financing needs of large-scale development projects are also driving demand for external debt, while restrained government spending is slowing non-oil sector growth, deepening reliance on international debt markets.

He added that the uptick in debt issuance reflects a deliberate Gulf strategy to reduce reliance on domestic liquidity and expand the investor base.. The issuance of Formosa bonds in Taiwan, for instance, illustrates the region’s push to diversify its funding sources. Yet Ramadan cautioned that the buildup of sovereign debt raises servicing costs and could eventually restrict governments’ ability to finance public projects if not managed with strict discipline and long-term planning.