Dubai: The Finance Ministry said that Saudi Arabia is planning to cut spending by more than 7% in the next year. The region’s largest oil producer is planning to trim a gaping budget deficit amid the coronavirus pandemic and reducing oil prices.
The kingdom expects its deficit to hit USD 79.4 billion this year, according to a government budget statement released late Tuesday, an estimated 12% of the country's gross domestic product (GDP).
The country is hoping to bring down its 4.9% of deficits of the economic output. This will be achieved by cutting down the expenditures up to USD 264 billion next year. For the first time, the budget did not offer a breakdown for oil and non-oil revenue because the kingdom's oil giant Aramco floated a sliver of its shares on the Saudi stock market last year, said Finance Minister Mohammed al-Jadaan.
Disclosing revenue forecasts could shed light on the billions of dollars in dividends the state-owned company continues to pay to shareholders despite a steep fall in revenue. Almost all of the dividend money goes to the company's majority owner, the Saudi government, to help cover state spending. Saudi Arabia has been grappling with a budget deficit since oil prices first plunged in 2014.