Saudi bankers estimate that the country needs as much as $5bn to finance its soaring budget deficit, according to the Financial Times.

The loan will help stave off a budget deficit which bankers estimate will reach 11% of gross domestic product or $15bn this year.

The Saudi budget in January was based on a deficit of $4.8bn.

Saudi Arabia, the world's top oil producer and the Arab world's wealthiest country, has been hit hard by rock-bottom oil prices.

'No comment'

Senior officials in Abu Dhabi would say little on the subject.

"I know about the loan but I can't comment more than that," said one UAE minister.

Top officials of the Saudi Arabian Monetary Agency, the country's central bank, were not available for comment "until Saturday or Sunday", according to members of their staff.

This is the second time in four months that the country's government has had to raise budget deficit finance.

In the summer, it borrowed $4.6bn from international markets, using the creditworthiness of the state oil company Saudi Aramco.

Oil price slump

Oil prices this week hit their lowest level for 25 years.

At one point, the price of the benchmark Brent crude closed in London at a record low of $10.21 a barrel.

Industry experts blame the fall in prices on the poor state of the world economy and the rapidly decreasing demand from Asian buyers.

The situation worsened last week when the organisation of oil producing countries, Opec, failed to agree new cuts in production to counter the massive over-supply which has contributed to the problem.

Heads of state of the six Gulf monarchies in the Gulf co-operation council, which collectively own nearly 45% of world oil reserves, are due to meet next week for their 19th annual summit.

Five of the six states - Kuwait, Bahrain, Qatar, Oman and Saudi Arabia are facing acute cash-flow problems.