Saudi Arabia signs $3bn deal with Korean firm to fund projects

The ministry of finance did not disclose the type of projects that would be financed through this deal

Saudi Arabia, the Arab world’s largest economy, rolled out a number of new projects to diversify its economy. Bloomberg

Saudi Arabia, the Arab world’s largest economy, signed a $3 billion deal with the Korea Trade Insurance Corporation (K Sure) to finance strategic government projects in the kingdom.

The agreement with the Korea's official export credit agency was signed by Saudi Arabia's minister of finance Mohammed Al-Jadaan and the chairman of K Sure Lee In-ho, the Saudi Press Agency reported.

“The agreement comes within the framework of co-operation witnessed between two G20 members,” Mr Al Jadaan said.

The facility was arranged through the National Debt Management Centre (NDMC), which is part of the Ministry of Finance, according to the statement.

Fahad Al-Saif, chief executive of NDMC, said “the financing attracted very strong interest from international banks across geographies”. The transaction has been closed with 10 international banks.

He did not specify the projects the country is planning to finance through the deal.

“This co-operation is expected to lead to the arrangement of meetings between service providers from South Korea and the owners of major future projects with the aim of securing financing on these projects,” the statement said.

Last year, Saudi Arabia finalised a similar deal worth 1bn Saudi riyals ($266 million) with export credit agency Euler Hermes for the procurement of 842 buses for King Abdulaziz Public Transport project.

Saudi Arabia is developing a number of new mega developments and is rolling out reforms to attract investment as part of the Saudi Vision 2030 programme.

Some of the projects launched by the country in the last few years include Neom, a $500bn futuristic project extending into Egypt and Jordan and the Red Sea project, which includes a nature reserve, diving in coral reefs and heritage sites on about 50 islands off the Red Sea coast. It is also constructing a mega entertainment and sports project named Qiddiya in the capital Riyadh.

The country’s economy is expected to grow 3.1 per cent this year, the International Monetary Fund said in October.

Saudi Arabia's Public Investment Fund is also injecting billions of dollars into the economy to spur growth. The fund will inject $40bn on an annual basis in 2021 and 2022, according to the kingdom's Crown Prince Mohammed bin Salman.

Recently, the kingdom approved a new mining law to boost foreign direct investment in the kingdom as it diversifies its economy. The new law came into effect on January 1.