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.
The kingdom is expected to see more comprehensive reforms under King Salman’s son Mohammed bin Salman, who chairs the Council of Economic and Development Affairs.
Bloomberg News said Saudi’s 2016 budget is probably based on crude prices of about $29 a barrel, suggesting the oil powerhouse intends to stick to its policy of maintaining high output despite low prices.
According to Saudi-owned broadcaster Al Arabiya, almost three-quarters of the country’s revenues in 2015 came from oil.
“Considering the price of oil has declined about 37 percent from the beginning of the year, cutting back expenditure by 2 percent is not a bad sign”.
The ministry said oil income made up just 73 per cent of total revenues in 2015, way below its contribution in previous years. He promised to diversify the kingdom’s revenues beyond oil, which now accounts for 90 per cent of the government’s income.
The country announced Monday a Riyal 513 billion budget for 2016, down from $229 billion in 2015.
Saudi Arabia also projected an $87bn (£58bn) shortfall for 2016.
Adjustments in electricity and water prices are expected to take effect on January 11, setting the pace for several other GCC countries set to implement utility subsidy reforms next year.
Jadwa Investment estimated the cost of energy subsidies in Saudi Arabia at $61 billion in 2015, of w …
The price for high grade unleaded petrol now sells for 0.60 Riyals (Rs. 10.61) and the lower grade petrol sells for 0.45 Riyals (Rs. 7.96).
Saudi Aramco’s Chairman Khalid Al-Falih said he is confident that local industries, including the Saudi petrochemical sector, would adjust to the rise in domestic energy prices and remain competitive.
According to the Finance Ministry, plans will be put in gear to increase charges on public services and apply value-added tax (VAT) in cooperation with other Persian Gulf Arab nations. Saudi Arabia has been leading a coalition against Shiite Houthi rebels in Yemen since March and is a member of the U.S.-led coalition battling the Islamic State group in Syria and Iraq.
The International Monetary Fund warned in October that Riyadh would run out of money within five years if it did not tighten its belt.