Saudi Arabia is planning to boost spending to 978 billion riyals ($261 billion) next year, up from 926 billion riyals in 2017, official data by the Saudi finance ministry revealed today.
The Arab world’s largest economy and one of the world’s top oil producers has contracted for the first time in eight years due to the painful austerity measures and the drop in oil prices.
Revenues for 2018 were estimated at 783 billion riyals ($209 billion), up from 696 billion riyals ($186 billion) last year, according to the government. This amounts to a13 per cent increase of the country’s annual revenue projections.
Actual revenues for the current fiscal year rose by a healthy 34 per cent compared to $185.6 billion in 2016 due a sharp increase in both oil and non-oil revenues, according to official data.
The Kingdom’s budget deficit in 2017 was estimated at 230 billion riyals ($61 billion), proving a steady decline from 297 billion riyals ($79 billion) in 2016 and 367 billion riyals ($98 billion) in 2015.
The government estimated the deficit for the next year to slightly decline by two per cent from 2017, amounting to 198 billion riyals ($52.8 billion).
Riyadh also postponed the target year to eliminate the budget deficit to 2023 instead of 2020, in reference to the economic difficulties currently facing the Kingdom.
King Salman said in his speech before the Cabinet on Tuesday when announcing the budget that it includes allocations for housing and funds “to push the economic wheel forward, and provide more employment opportunities for male and female citizens.”
He added that the Gulf country would “continue to decrease its dependence on oil to reach just 50 percent” of total revenues. Saudi’s unemployment reached to 12.8 percent in June, up slightly compared to last year.
The Saudi Crown Prince Mohammed Bin Salman, who oversees economic affairs, recently announced that “the 2018 expansionary budget includes a number of new development projects.”
“About 50 percent of the new budget will be financed from non-oil sources,” he said, quoted by the official Saudi Press Agency (SPA).
Last month, the Crown Prince launched a wide-ranging crackdown on dozens of elites, ostensibly to tackle corruption, but experts say it was also a way of consolidating his grip on power.
Since 2015, the ultra-conservative kingdom has introduced a series of price hikes on fuel and electricity. It has also imposed fees on expats and is preparing to introduce value-added tax in the new year.
The government has also allocated $13.9 billion for the cash transfer programme called the Citizen Account to compensate the needy for hiking prices.