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Thursday, May 23, 2024

Saudi Arabia aims to eliminate budget deficit by 2023


Saudi Arabia said on Sunday it expects to balance its budget by 2023, as oil prices rebound and the deficit-hit kingdom looks to diversify revenue.

“The deficit is expected to continue to decline gradually over the medium term… until it reaches the fiscal balance by 2023,” said Saad Alshahrani, head of the finance ministry’s fiscal policy department, in a statement carried by the official Saudi Press Agency.

The kingdom — the world’s top crude exporter — has posted budget deficits totalling more than $260 billion (225 million euros) since the 2014 crash in oil prices.

Read More: The ramifications of Saudi Arabia joining CPEC

The shortfall came in at a preliminary 9.3 percent of gross domestic product in 2017, down from 17.2 percent in 2016, according to International Monetary Fund data.

Alshahrani said the government would continue to close the budget gap through “structural reforms,” including reassessing government spending and ensuring more Saudi citizens enter the employment market.

Saudi Arabia has pushed an aggressive campaign to diversify its income sources in recent years, hiking fees on expatriate workers and raising fuel and electricity prices. It is also looking to replace foreigners with local hires, in a bid to contain welfare payments to citizens.

The Saudi economy took a turn for the better in the first half of 2018, as revenues jumped 67 percent, mainly due to a rise in oil prices.

Read More: IMF urges Saudi Arabia to contain spending and wages

But public spending rose 34 percent for the same period, according to official figures. In a report last month, the IMF recommended reducing the government wage bill, as part of measures to bring the deficit down to 1.7 percent of GDP in 2019.

Plans to list oil giant Aramco’s shares on the stock market — which authorities said would raise $100 billion — have stalled this year.

Aramco’s chief executive Amin Nasser on Sunday declined to confirm whether the firm still aimed to go public by 2020 but said the government was “committed” to the flotation in an interview with CNBC.