Saudi Arabia posted a record $98 (€ 89 bn) budget deficit in 2015,
the finance ministry said on Monday. Although this is a record deficit,
it is better than what the International Monetary Fund projection of
$130 bn for 2015.
This is the second time in the Kingdom’s history that that it posts a budget deficit.
Revenue was estimated at 608 billion riyals ($162 billion), that is,
42% lower than 2014 and 15% lower than originally anticipated. Spending
remained steady at 975 bn riyals ($260 bn).
Oil constitutes 90% of the Kingdom’s public revenue. Oil prices were
lower than even the most pessimistic projection of 50$ a barrel.
Moreover, Riyadh had to face increased military expenditure in Yemen.
The Kingdom has created for itself fiscal space during the course of
years of high oil prices. Until 2015, Saudi had a miniscule 1,9%
debt-to GDP ratio. In July 2015, its foreign reserves stood at $ 669 bn.
Meanwhile, Saudi could chose to devalue the Riyal that is currently at a
3.75 Saudi Riyals to the US Dollar peg.
In addition, the Kingdom has taken solid steps for the
diversification of the economy. In June 2015, Saudi Arabia opened its
stock exchange to Qualified Foreign Investors, which did attract
capital, although there is still a ceiling on volume. And the state
engages foreign investors in various projects: from rail to housing and
from industry to ports. Finally, certain sectors are beginning to show
world-class quality, including IT, electricity production, minerals, and
health care.
http://neurope.eu/article/record-saudi-deficit-posted/