Saudi Arabia deficit plunges by nearly three-quarters after cuts

Saudi Arabia deficit plunges by nearly three-quarters after cuts
3 min read
12 May, 2017
Saudi Arabia, the world's top crude exporter, has dropped its budget deficit by 71 percent after spending cuts and a rebound in oil revenues.

Saudi Arabia's budget deficit dropped by 71 percent in the first quarter of 2017, the government said on Thursday, after spending cuts and a major rebound in oil revenues.

The world's top crude exporter has made an aggressive push to diversify its traditionally oil-dependent economy after the drop in global prices since 2014 slashed its revenues.

Finance Minister Mohammed al-Jadaan on Thursday said the deficit had dropped to 26 billion Saudi riyals ($6.93 billion) in the first three months of the 2017 fiscal year.

Saudi Arabia's budget deficit was initially projected at $53 billion for the whole year, after an even bigger deficit last year that prompted subsidy cuts, delays in projects and a temporary government salary freeze.

"This is a very encouraging figure and clearly reflects our aim to achieve a balanced budget in 2020," Jadaan said.

This is the first time that Saudi Arabia has released budget figures on a quarterly basis, a measure it says is aimed at boosting transparency.

Total revenues for the first quarter were at 144.076 billion riyals ($38.41 billion), an increase of 72 percent from the same quarter last year.

Oil revenues were also notably up in the first quarter at 112 billion riyals ($29.86 billion) with a growth rate of 115 percent from the same quarter last year.

Non-oil revenues - a key part of the country's drive for diversification - stood at 32 billion riyals ($8.53 billion), a one percent increase from the same quarter last year.

This is a very encouraging figure and clearly reflects our aim to achieve a balanced budget in 2020.
- Mohammed al-Jadaan

The Saudi government last year announced a sweeping diversification plan called "Vision 2030". It aims at developing its industrial and investment base and boosting small and medium-sized businesses in a bid to create more jobs for Saudis - and particularly women - and reduce reliance on oil revenue.

In September, the state froze salaries and reduced benefits for civil servants - who comprise the bulk of the workforce - as part of a package of austerity measures.

King Salman revoked the measures in a royal decree last month.

High on the diversification agenda is the kingdom's plan to sell some five percent of state oil giant Aramco to private owners next year.

Foreign workforce

Saudi Arabia has also announced foreigners would no longer be allowed to work in Saudi Arabia's numerous shopping malls, in a measure to boost employment of Saudis.

About nine million foreigners worked in the kingdom at the end of 2015, the most recent official figures available.

On Wednesday, local media reported that Saudi ministries were given three years to fire all of their 70,000 foreign workers.

"There will be no expatriate workers in the government after 2020," Abdullah al-Melfi, deputy minister for civil service, instructed ministry officials during a meeting.

"The complete nationalisation of government jobs is an important objective of the national transformation programme 2020 and the kingdom's Vision 2030," Melfi added.

It comes as part of the kingdom's ambitious national transformation programme for 2020, which will see government positions filled by Saudis and a massively reduced public sector.

Agencies contributed to this report.