As Saudi Arabia continues to flaunt its so-called economic transformation under Vision 2030, the regime finds itself staring down a deepening financial crisis. In a move that appears more like a financial sleight of hand than a viable solution, banks and corporate sectors have begun pushing for the securitization of non-performing loans (NPLs)—a tactic that, while glossy on paper, exposes the crumbling structure beneath the kingdom’s economic narrative.
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A Structural Crisis, Not a Temporary Glitch
Saudi Arabia’s mounting bad debt problem is not a post-pandemic anomaly. It is the culmination of decades of rentier policies, unchecked borrowing, and the absence of financial transparency. According to domestic banking reports, the rate of delinquent loans has surged dramatically in the past three years, exacerbated by the COVID-19 pandemic and the volatility of global oil prices.
What once appeared manageable has now morphed into a systemic threat. Securitizing these bad debts—transforming them into tradable financial instruments—is less a genuine reform and more a desperate bid to recycle a failing system.
What Is Securitization and Why Now?
Securitization is the financial process of bundling debt into securities that can be sold to investors. Ideally, it injects immediate liquidity into struggling institutions. But in Saudi Arabia’s case, it coincides with a growing inability of companies to recover their dues, coupled with a legal system that offers little recourse for creditors.
How, then, can the market trust financial products backed by fundamentally worthless assets? And what investor would willingly gamble on securities built on unrecoverable debt?
Warnings from Experts: Papering Over Cracks
Economists are sounding the alarm. Without structural reform, securitization could do more harm than good. Dr. Samer Al-Harithi, a Gulf financial analyst, remarked:
“Asset-backed securities work in economies governed by rule of law, transparency, and investor protection. None of those conditions exist in the Saudi context.”
He added, “This isn’t financial innovation—it’s repackaged failure, sold with a ribbon.”
Behind the Numbers: Regulatory Apathy and Cosmetic Oversight
A primary driver of the NPL crisis is weak regulatory enforcement. Banks extend credit recklessly, firms issue liabilities with little oversight, and financial authorities play more of a public relations role than a regulatory one.
Despite all the Vision 2030 rhetoric about governance and transparency, annual reports from Saudi institutions remain vague and filled with euphemisms. Without an overhaul of financial disclosure practices, securitization may only inflate another economic bubble.
A Strategic Deflection from Economic Collapse
What we are witnessing is not a strategy—it’s an escape. Instead of addressing the root causes of economic fragility, the regime prefers glossy, short-term fixes designed to keep the illusion alive. Securitization in this case is less about solving a debt problem and more about avoiding accountability.
In economies where institutions are weak and transparency is scarce, these tactics transform markets into gambling halls, not investment ecosystems. Foreign investors will remain wary, while domestic confidence continues to erode.
Saudi Arabia Needs Reform, Not Financial Alchemy
What Saudi Arabia needs is not another round of financial engineering, but a fundamental restructuring of its political and economic framework—starting with anti-corruption, institutional independence, and genuine judicial reform. Securitizing bad debt is not a cure. It is a symptom. And when a government resorts to this kind of trickery, it admits—whether implicitly or not—that the crisis is deeper than it claims. Without real reform, these fragile façades will not hold.
