Bloomberg/Faisal Al Nasserby Kudakwashe Muzoriwa
Saudi Arabia, the Arab world's largest economy, has announced a SAR 1.02 trillion ($272.00 billion) budget for 2020, a slight fall in spending that reversed the Kingdom’s three years of expenditure increases intended to spur non-oil economy growth.
According to local newswire, Saudi Press Agency,revenues in 2020 are forecasted at SAR 833 billion, widening the budget deficit to SAR 187 billion or 6.4 per cent of (GDP) compared with a projected deficit of SAR 131 billion or 4.7 per cent of GDP in 2019.
To cover for the budget deficit, the Kingdom authorised the Minister of Finance to withdraw from the state's general reserve account as well as issue debt instruments and all kinds of Sukuk, inside and outside of Saudi Arabia.
Mohammed al-Jadaan, the Finance Minister said that the 2020 budget was conservative on revenues because of the global economic outlook, but the government would continue to pay a cost of living allowance to citizens.
Crown Prince Mohammad bin Salman bin Abdulaziz Al Saud, said, “The 2020 budget comes in light of a global economic climate that prevails challenges, risks and protectionist policies, which requires flexibility in managing the public finances and enhancing the ability of the economy to address these challenges and risks.”
The Crown Prince stressed that the stage of economic transformation adopted by Saudi Arabia is progressing according to the Kingdom’s Vision 2030 and the budget will reinforce the commitment to implement reforms, plans and programmes aimed at achieving what was included in the strategy.
The Saudi finance minister also said that the proceeds from Saudi Aramco’s share offering would be invested locally helping to create more revenue channels for the government.
Saudi Arabia’s King Salman bin Abdulaziz Al Saud said that the Kingdom will continue implementing economic reforms, diversifying sources of income including investing proceeds of Saudi Aramco IPO by the Public Investment Fund to empower the private sector, at the same time raising the level of transparency and efficiency of government spending to boost growth.
Reuters reported that Riyadh plans to cut military spending by eight per cent to SAR 182 billion while oil revenue is expected to fall to SAR 513 billion in 2020, from an estimated SAR 602 billion in 2019.