Saudi borrowing plan, Bahrain’s austerity steps, KSA opens up

Saudi Arabia kicked off 2026 with its first debt issuance of the year. Like last year, we think borrowing will exceed the authorities' plans as lower oil prices lead to a wider budget deficit and quicker-than-expected rise in the public debt-to-GDP ratio. Elsewhere, Bahrain’s high debt burden has forced officials into tightening fiscal policy by raising taxation and cutting spending, but it may not be enough to prevent debt rising further although the risk of default is mitigated by the likelihood of financial support from the rest of the Gulf. Finally, Saudi’s financial markets will open up to all investors at the start of next month, which may provide a much-needed lift to capital inflows as the current account position deteriorates.