Riyadh has selected 13 domestic banks to participate in Saudi Arabia’s planned local currency Islamic bond issuance programme, according to the kingdom’s finance ministry.

The local Alinma Bank has assisted the government in structuring the sukuk programme, the ministry’s debt management office said in a statement on its website. The bank did not specify when it plans to start issuing sharia-compliant notes, and did not provide any information on how banks will participate in those transactions.

Any issues would be at the ministry’s discretion, the brief statement said.

Beside Alinma, lenders qualified to participate in the government debt programme include Alawwal Bank, Al Rajhi Bank, Arab National Bank, Bank Albilad, Bank Aljazira, Banque Saudi Fransi, Gulf International Bank, Riyad Bank, Samba Financial Group, Saudi Investment Bank, National Commercial Bank and Saudi British Bank.

Reports citing Finance Minister Mohammed al-Jadaan suggested that the local currency sukuk issues could begin this month. Saudi Arabia had secured $10bn through a conventional loan and more than $17bn when it sold the record-breaking debt bond in October last year. It also raised $9bn through a dollar-denominated dual sukuk deal earlier this year. It is now focused on the domestic sukuk market to raise additional funds in a bid to narrow the budget gap caused by a slump in the oil prices.

Media reports say the size of the first sukuk could be around SR10bn ($2.7bn), and that issues might then be sold on monthly basis. Officials in Riyadh have estimated that the government could raise about 25 to 35 per cent of the fiscal deficit this year, which is projected at almost SR200bn.