Saudi Arabia is planning a debt auction, which could raise as much as SR20bn ($5.3bn) as the kingdom looks to plug its budget deficit amid a continued slump in oil prices.

The debt auction next week will be the first for Saudi Arabia this year, an indication that the biggest oil exporter in the world will continue to tap the local market for funds. The Saudi Arabian Monetary Agency (Sama) plans to price the auction on 24 January and settlement of the sale will take place two days later, according to news agency Bloomberg, which cited unnamed persons familiar with the matter.

The five-year tranche may be priced from 40 basis points to 45 basis points above similar maturity US Treasuries, the seven-year segment 50 basis points to 55 basis points and the 10-year securities 60 basis points to 65 basis points.

Spokesmen for Sama and the Ministry of Finance declined to comment to the news agency.

Saudi Arabia is the biggest Middle Eastern economy, which relies heavily on the sale of hydrocarbons for revenues. Oil prices have lost about a third of their value since mid-2014, hovering under $30 per barrel. With shrinking revenues, the kingdom could face a budget deficit which could be 14 per cent of gross domestic product this year, according to International Monetary Fund. Saudi Arabia will probably sell about SR120bn of debt in 2016 to support its finances, Saudi Fransi Capital said in October.