Saudi Arabia expects wider 2020 budget deficit
Riyadh, Saudi Arabia - Saudi Arabia said it expects its budget deficit to widen next year to SAR187bn (US$49.86bn), projecting a shortfall for the seventh year in a row amid low oil prices.
That marks a substantial increase from a projected budget deficit of SAR131bn (US$35bn) for this year, Finance Minister Mohammed al Jadaan said in a statement ahead of a final budget announcement in December.
“It is projected that expenditure will reach SAR1,020bn in 2020, focusing on improving the efficiency of spending without any disruption to diversification and transformation plans,” the statement said.
“Revenues are projected to reach about SAR833bn in 2020, while the budget deficit is projected reach about 6.5 per cent of GDP.”
The world’s top crude exporter has posted a budget deficit since 2014, when a crash in oil prices shrank Saudi Arabia’s revenues. Prices have partially recovered since then, but in the face of persistent budget deficits the OPEC kingpin has introduced a raft of reforms to diversify its economy away from oil.
The kingdom has increased the prices of fuels and electricity, imposed a 5 per cent value added tax (VAT) and levied duties on 11mn expatriates in a bid to generate additional revenue.
Earlier this month the International Monetary Fund (IMF) sharply downgraded growth projections for Saudi Arabia, citing low oil prices among other factors. The forecast for Saudi Arabia, the region’s largest economy, was cut to just 0.2 per cent for 2019, a substantial 1.6 percentage points lower than April’s projections.
The outlook is the worst since 2017 when the kingdom’s economy contracted by 0.7 per cent.
But the IMF raised its Saudi growth forecast for next year to 2.2 per cent, slightly above April’s projections, on expectations that the non-oil sectors will
It is projected that expenditure will reach SAR1,020bn in 2020
Mohammed al Jadaan
strengthen following subsidy reforms.
Fitch Ratings in September downgraded Saudi Arabia’s credit rating by one notch after attacks on key oil facilities that knocked out half its production.