Saudi Arabia to diversify income, raise efficiency
King Salman blames Assad for IS rise in Syria
RIYADH: Saudi King Salman yesterday said he has ordered economic reforms to diversify sources of income and reduce high dependence on oil following a sharp drop in crude prices. “Our vision for economic reform is to increase the efficiency of public spending, utilize economic resources and boost returns from state investment,” he said in an address to the Shura Council. “I have directed the Council of Economic and Development Affairs to devise the necessary plans, policies and programs to achieve that,” he told the consultative body, without elaborating.
Oil income accounts for more than 90 percent of public revenues in Saudi Arabia. The world’s largest oil exporter, Saudi Arabia is facing an unprecedented budget crunch as the price of oil has dropped by more than 60 percent since mid-2014. The king said Saudi Arabia carried out a large number of mega infrastructure projects and boosted its fiscal reserves in the past several years when oil prices were high.
The size of the fiscal buffers has enabled the kingdom to overcome the consequences from the sharp decline in oil revenues, said the king, adding that development projects have not been affected by the drop. Saudi Arabia is projected to post a record budget deficit of around $130 billion for this year, the International Monetary Fund says. The IMF has advised Riyadh to implement reforms, including expanding non-oil revenues, warning that failure to do so would deplete its foreign reserves.
The kingdom, which has been pumping around 10.4 million barrels a day, has withdrawn funds from its foreign reserves and also issued bonds to finance the budget deficit. At the end of October, its reserves fell to $644 billion from $732 billion at the end of last year. The finance ministry has issued bonds worth $20 billion for the domestic market. In 2014, Saudi Arabia posted a budget deficit of $17.5 billion, only its second since 2002.
In his speech, King Salman also accused Syrian President Bashar Al-Assad yesterday of having aided the rise of the Islamic State group and called for a political settlement with moderate forces to end the war there. The solution would be to form “a transitional government made up of moderate opposition forces, ensuring the unity of Syrians and the departure of foreign forces and terrorist organizations,” the king told the Shura Council.
These organizations “could not have found fertile ground in Syria, had it not been for the Syrian regime’s policies, which have exterminated hundreds of thousands... and displaced millions” of people, said the monarch. More than 250,000 people have been killed in Syria since the conflict broke out in March 2011. The kingdom, a key-backer of Syrian opposition groups, has repeatedly insisted on Assad’s departure.
Earlier this month, Riyadh hosted a meeting of various Syrian armed and political opposition groups who agreed to negotiate with the regime but set Assad’s departure as a condition for any eventual political transition process. The kingdom “calls for a political solution to end Syria’s crisis,” said King Salman, who made only a brief appearance at the council. He read only part of the speech, the entire text of which was later published on the official SPA news agency.
In November, foreign ministers from countries that back and oppose Assad’s regime agreed on a roadmap to end the conflict. This would see a transitional government set up within six months, after regime-opposition talks, and elections within 18 months. — Agencies