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Saudi Arabia plans budget deficit for 2016

Saudi Arabia plans budget deficit for 2016

Saudi Arabia

Saudi Arabia has announced a planned budget deficit for 2016 as it plans to gradually “cut subsidies”: http://www.bloomberg.com/news/articles/2015-12-28/saudi-arabia-aims-to-cut-spending-to-840-billion-riyals-in-2016 and sell stakes in government entities to counter a slump in oil revenue.

The government has also initiated plans to cut spendings and raise revenue from other sources other than oil.

The Council of Economic and Development Affairs said on Monday that the world’s top oil exporter ran a deficit of 367 billion riyals ($97.9) billion in 2015. Adding that spending which reached 975 billion riyals this year, is projected to drop to 840 billion. While revenue is forecast to decline to 513.8 billion riyals from 608 billion riyals.

This year’s original budget plan envisaged 715 billion riyals of revenues.

The 2016 budget is the first under King Salman, who assumed power in January with his team of Economic Council dominated by his powerful son, and Deputy Crown Prince Mohammed Bin Salman.

Collapse in global oil prices has slashed the country’s government revenue thereby making government officials spend reserves and issue bonds first time in nearly a decade.

Saudi’s Ministry of Finance in a statement said the budget was approved considering challenging economic and financial circumstances in the region and in the world. Adding that the deficit will be financed through a plan that considers the best available options,including domestic and external borrowings.