Saudi Arabia’s budget deficit soared to $98bn (£65.7bn) this year as the world’s biggest oil exporter counted the cost of falling crude prices.
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Saudi Arabia’s government ran a record budget deficit of SAR367 billion (USD97.9 billion) in 2015 because of low oil prices, Council of Economic and Development Affairs said.
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Saudi Arabia unveiled its budget for 2016 with a projected deficit of 326 billion riyals (87 billion dollars), as the oil-rich kingdom has been hard hit by low global commodity prices.
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Oil prices have fallen by more than half ever since that November 2014 decision, with Brent crude, the worldwide benchmark, trading at about $37 a barrel on Wednesday in London, its lowest level since the 2008-09 financial crisis.
Saudi Arabia said on Monday it posted a deficit of $98 billion (89 billion euros) in 2015 after a steep decline in oil revenues. Prices will also increase for water, electricity, diesel, and kerosene.
“Our economy has the potential to meet challenges”, King Salman said in a speech, adding the 2016 budget launched a phase in which his kingdom would diversify its revenues.
Income from crude exports was 444.5 billion riyals, making up 73 per cent of total revenue. Russian Energy Minister Alexander Novak said this week that Saudi Arabia has actually increased production by 1.5 million barrels per day, a level he blamed for instability in the crude oil market.
National oil conglomerate Aramco said on Twitter it was immediately closing petrol stations until midnight on Monday (local time), when it will resume sales at new prices.
To counter the shortfalls, Riyadh introduced unprecedented hikes to the prices of fuel, electricity and other utilities by as much as 80 percent, reducing decades-old subsidies. A quarter of that will be allocated to military and security purposes.
The IMF has warned Riyadh that failure to cut spending and implement reforms will eat up the country’s fiscal reserves in just five years.
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Spending this year rose by 13% more than analysts forecast and topped $260 billion (£174 billion), mainly because of the country’s war efforts in Yemen and its role in helping to fight ISIS (also known as the Islamic State, Daesh, or ISIL) troops in neighbouring states.
