Riyadh can balance budget with $80 oil
There are no plans to lower public spending
Riyadh: Top oil exporter Saudi Arabia would still be able to balance its budget even if oil prices fall to less than $80 per barrel, Al Arabiya television reported on Tuesday, citing the kingdom's finance minister, Ebrahim Al Assaf.
"As you know the oil revenues are affected by two factors: price and production… the price that leads to a balance [in the budget] is less than $80 per barrel," Al Assaf told the channel, but declined to give further details.
Al Assaf said earlier on Tuesday Saudi Arabia will continue to experience strong growth this year and remains committed to its massive social spending programme, even as the risks to the global economy remain high and the prospect of crude oil prices declining remains a threat.
Asked if Saudi Arabia would tweak its spending plans if crude oil prices were to drop below $80 (Dh293) a barrel, he said: "The kingdom has no plans to lower its public spending even if oil prices drop from current levels." But "$100 [per barrel] is a very comfortable price for our budget," added.
Earlier this month, Saudi oil minister Ali Al Nuaimi told reporters in Adelaide, Australia that the largest producer in the Organisation of Petroleum Exporting Countries would like the price of benchmark Brent crude oil to fall to US$100 a barrel.
"Now, it is still high," he said.
The International Monetary Fund recently warned that the Middle East and North Africa were the regions most vulnerable, after Europe itself, to any worsening of that continent's debt crisis, chiefly because economic turmoil in Europe would depress oil prices worldwide.
Saudi Arabia is in the middle of a massive public-spending boom — $400 billion through 2013 for infrastructure, and more than $100 billion for jobs, housing, bonuses and other programmes to help ward off any potential unrest after uprisings hit some other Arab nations.
Spending
Stepped-up spending on education, health care and other social programmes dominated a 690 billion Saudi riyals (Dh675 billion) budget outlined last December for 2012, although the kingdom indicated it plans to eventually trim such massive expenditure. Saudi Arabia anticipates revenue will fall from 1.1 trillion riyals in 2011 to 702 billion riyals in 2012.
