Saudi budget to raise domestic fuel prices

Saudi Arabia’s state budget for 2017, which is expected to be released today, will boost spending to support economic growth while raising domestic energy prices to ease the government’s subsidy burden, sources told Reuters. The government is expected to announce its budget deficit fell sharply this year to 297 billion riyals ($79.2 billion), the sources, who are familiar with the budget planning, said yesterday.

That would allow Riyadh to claim substantial success in its battle to reduce a huge deficit caused by low oil prices. The deficit totaled a record 367 billion riyals in 2015, and the original budget for this year projected a 326 billion riyal gap. The finance ministry did not respond to a request for comment yesterday. The sources said the numbers which they quoted were not final and could still be modified, but that they did not expect any major changes.

Government revenues totaled 528 billion riyals in 2016, slightly higher than the 514 billion originally projected, while spending was 825 billion riyals, slightly lower than the 840 billion in the original plan. The 2017 budget plan sets spending of 890 billion riyals, 6 percent higher than the original projection for spending in 2016. Revenues next year are projected at 651 billion riyals, up from 514 billion. The higher spending would permit gross domestic product growth to accelerate to 2.0 percent in 2017 from an estimated 1.7 percent this year, the sources said. —