Saudi Arabia projected a deficit of $87 billion as it issued its 2016 budget on Monday, the kingdom’s third annual shortfall in a row due to the oil price slump.
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Economists in Saudi, according to the report, expect the 2016 budget’s spending to be worth $213.2bn (SAR800bn), which is up to 20% less than 2015’s actual spending.
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Revenues next year are forecast at 514bn riyals, down from 608bn riyals in 2015.
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The Budget deficit is the highest in the history of Saudi Arabia, the world’s largest oil exporter, but was not as big as some expected. The world’s top oil exporter reduced its dependence on crude by 23 percent in the 2015 fiscal year, the ministry said Monday.
It comes on the back of sliding crude prices, with oil sales accounting for nearly 80 percent of the country’s revenues.
The Saudi central bank, the Saudi Arabian Monetary Agency (SAMA), has plenty of money set aside for a rainy day – or more accurately, for a few years of deficit spending.
Revenues were estimated at 608 billion riyals (S$228 billion), well below projections and 2014 income, while spending came in at 975 billion riyals, ministry officials announced at a press conference in Riyadh.
Bloomberg also pointed out that the Saudi government plans on cutting subsidies and selling stakes in government entities to counter the sharp decline in oil revenue in the coming year.
A more comprehensive, multiyear plan that will focus on generating non-oil income and include other economic and social reforms, such as restructuring generous subsidies, is expected to be presented in early 2016.
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A number of structural economic reforms, including “privatizing a range of sectors and economic activities”, would also be planned, the ministry added without giving details. In addition to collecting more revenue from sources other than oil sales, it aims to become more systematic about controlling government costs – both by increasing the efficiency of major project expenditures and by reining in the growth of wages, salaries and allowances.
