Saudi Arabia’s deficit is projected to decline by a third next year, according to the budget statement 2017 signed by the Custodian of the Two Holy Mosques King Salman at a special cabinet session in Riyadh on December 22, 2016. During the extraordinary meeting, the council of ministers said that next year’s budget deficit would be SR198 billion (about $53bn), according to Saudi Press Agency (SPA).
The deficit for 2016 stands at SR 297 billion, around 9% lower than the forecast, and far below the high of SR366 billion registered in 2015, after the crash of oil price.
“The government has been able to finance the deficit by drawing from reserves and surpluses, in addition to borrowing SAR200.1 billion on international debt markets,” the budget documents said.
Expenditure for 2016 stood at SR825 billion, excluding that related to the previous year, less than the SR 840 billion originally forecast. The expenditure in 2017 is estimated at SAR890 billion, an 8% increase over 2016.
Oil revenues are estimated at SR480 billion, 46% higher than the 2016 projections. Non-oil revenues are estimated at SR212 billion, a 6.5% or SR13 billion increase over the 2016 projections.
The budget 2017 reiterated the Kingdom’s aim to eliminate the fiscal deficit altogether by 2020. This is in line with the Kingdom’s Vision 2030 and related programs, including the National Transformation Plan 2020.
In 2016, Saudi Arabia’s total revenues are expected to reach SR 528 billion, and are forecast to rise to SR692 billion next year.
The total national debt for 2016 was approximately SR316.5 billion, which is 12.3% of the projected gross domestic product (GDP) in fixed prices for 2016. Official documents showed that the national debt will not exceed 30% of GDP.
“Following successful debt issuances in 2016, debt issuance will continue as and when needed, subject to local and international market conditions,” the budget documents said. “The Kingdom will seek to raise further debt at attractive rates on international markets.”
This could include diversifying the type of issued debt by issuing Shariah-compliant instruments such as sukuk inside and outside the Kingdom.
In the budget speech, the King underscored that the budget announcement comes amid economically volatile situations suffered by most states.
He said, “Our economy is firm and it has sufficient strength to cope with the current economic and financial challenges, and this is the result of the prudent fiscal policies taken by the state. We are determined to strengthen the elements of our national economy, where we adopted Kingdom’s vision 2030 and its programs according to a comprehensive reform vision that can transfer the Kingdom to broader and more comprehensive horizons to meet the challenges and strengthen its position in the global economy.
“Our vision is not only a set of ambitions, but it is executive programs to enable us to achieve our national priorities and provide opportunities for all through strengthening and developing partnership with the private sector, building a system capable of achievement, raising the pace of coordination and integration among all government agencies, continuing fiscal discipline and promoting transparency and integrity.”
Minister of Finance Mohammed bin Abdullah Al-Jadaan said during the post-budget press conference that the state’s general budget for the fiscal year 1438/1439H (2017) includes broad plans and economic and social development programs aiming at preparing the Kingdom for the future and to improve the level of performance of the government and private sectors and to promote transparency and to raise the efficiency of spending in order to increase the quality of services being provided for citizens to promote their welfare.
Latest posts by Abu Osama (see all)
- Dubai Gold and Commodities Exchange records 36% growth - January 19, 2017
- Dubai Chamber to launch initiatives to help entrepreneurs - January 19, 2017
- Aluminium Bahrain sets output record - January 17, 2017