Business | Economy
Saudi Arabia expects $16b budget deficit
Saudi Arabia expects to post its first budget deficit since 2002 next year as the world's top oil exporter boosts public spending to spur its economy during an oil price slump and global downturn.
- Reuters
- Published: 23:36 December 22, 2008
Riyadh: Saudi Arabia expects to post its first budget deficit since 2002 next year as the world's top oil exporter boosts public spending to spur its economy during an oil price slump and global downturn.
The kingdom sees a deficit of 65 billion riyals ($16 billion) in 2009 as it raises its expenditures to an expected 475 billion riyals, the finance ministry said in a statement.
"This is a confidence building budget," said John Sfakianakis, chief economist at SABB bank, noting the kingdom last posted a budget deficit in 2002.
"The world is facing a recession and Saudi Arabia is spending the money."
Saudi Arabia expects to have a record budget surplus of 590 billion riyals in 2008, which is more than three times its level in 2007, the ministry said in a statement. State expenditures in 2008 are seen reaching 510 billion riyals while revenues would hit 1.1 trillion riyals.
Oil prices rallied to a record above $147 a barrel in July but have tumbled by as much as three-quarters since amid demand concerns as many major economies, including the United States and Japan, enter recession.
The 2009 spending forecast is 15.8 per cent higher than this year's forecast of 410 billion riyals - which Saudi Arabia exceeded by 24.4 per cent as it poured funds into projects designed to wean its economy away from relying on oil export revenues.
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