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Saudi Arabia projects $87B budget deficit as lower oil prices cut into
Saudi Arabia’s government ran a record budget deficit of 367 billion riyals ($97.9 billion) in 2015 because of low oil prices, the Council of Economic and Development Affairs said on Monday.
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They expect the 2016 budget to plan spending of about 800 billion riyals, roughly 20 percent lower than their estimate of this year’s actual spending. Next year’s budget projects spending of 840 billion riyals, down from 975 billion spent this year.
Saudi Arabian stocks swung between gains and losses hours before the government plans to unveil next year’s budget as some investors speculated the nation’s deficit this year may be less than forecast.
In the first budget under King Salman, the kingdom said revenues reached 608bn riyals (£108.7bn; $162bn), down 15% on official expectations.
Minister of Economy and Planning Adel Fakieh took office in April and, in the administration of Deputy Crown Prince Mohammed bin Salman, has begun to play a key role in planning Saudi Arabia’s strategy to cope with an era of cheap oil.
The original budget plan for 2015 projected spending of SR860 billion ($229 billion).
Meanwhile, Al Eqtisadiya business news website said the non-oil revenues have grown by 43 billion dollars, which reduces the financial pressure of the dropping oil prices in the oil-rich country.
The kingdom has seen a sharp drop in revenues as oil prices have fallen by more than 60 per cent since mid-2014 to below $40 a barrel.
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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.