JEDDAH: Saudi Arabia on Monday unveiled a SR840 billion budget, launching a phase in which the Kingdom hopes to further diversify its revenues in an era of low oil prices.
“Our economy has the potential to meet challenges,” Custodian of the Two Holy Mosques King Salman said in his speech.
The government incurred a deficit of SR367 billion ($97.9 billion) or 15 percent of gross domestic product in 2015, officials said. The 2016 budget plan aims to cut that to SR326 billion.
Next year’s budget projects spending of SR840 billion, down from SR975 billion actually spent this year.
The ministry said it would review government projects to make them more efficient and ensure they were necessary and affordable.
Revenues next year are forecast at SR514 billion, down from SR608 billion in 2015, when oil revenues accounted for 73 percent of the total.
The Brent oil price averaged about $54 a barrel this year but is now around $37.
Prominent Saudis from various sections of society welcomed the national budget, describing the announcement as balanced and based on solid foundations supporting ongoing development projects.
Fahad Alturki, chief economist and head of research at Jadwa Investment, told Arab News: “Despite the global environment of lower oil prices, the Kingdom has maintained a high level of spending in the 2016 fiscal budget. Education and health care remain the focus of government spending, accounting for 35 percent of total spending.”
He said: “Despite being reduced slightly, budgeted spending is set to play a vital role in supporting the economy in 2016.”
The budget allocates SR191 billion to education while SR213 billion will go to “military sectors.”
Separately, nonoil revenues increased by 29 percent to SR163 billion.
This is the first budget announcement since King Salman’s ascension to the throne and is expected to reflect reforms he announced last week.
“Our vision for economic reform is to increase the efficiency of public spending, utilize economic resources and boost returns from state investment,” he told the Kingdom’s Shoura Council on Wednesday.