Budget Deficit and Debt Issuance

Debt issuance(s) keeps playing a pivotal role in financing budget deficits among emerging markets. Sukuk were used as an instrument to diversify the investor base for some sovereigns.

If we are to look at how countries finance their respective deficits, we would find that they resort to several options, including:

Issuance of debt instruments and loans (borrowing).Withdrawal from their foreign reserves.Sale of assets and privatization.

For instance, before 2017, Saudi Arabia used to resort to financing a large part of its budget deficit by withdrawing from the foreign reserves. However, following the country becoming among the most prominent issuers in emerging markets, in terms of fixed income instruments, the pace of withdrawal from the foreign reserves has sh...