Saudi Arabia, the biggest GCC economy, has asked banks to submit their interest in advising the government on an international loan that could be total around $10bn.

The government has sent an invitation to banks to discuss the loan, according to news agency Reuters, which cited unnamed sources aware of the matter. Riyadh’s invitation did not specify the size of the loan, but the sources said it could be around $10bn or possibly more.

The kingdom, which expects a SR326bn budget deficit in 2016, has embarked on spending cuts to compensate for shrinking oil revenues. The SR444.5bn oil proceeds in 2015, represented 73 per cent of the kingdom’s total revenues. This is 23 per cent less than the income generated from the sale of crude a year earlier.

The government has resorted to drawing down on the foreign reserves and tapping the Saudi banks and financial institutions with local currency bonds to plug the budget deficit. It will be the first international debt capital market transaction for the Riyadh in years if it decides to go ahead with the transaction.