The Saudi budget would be around SR800 billion ($213.3 billion) in 2015 if the price of oil ranges between $50 to $60 per barrel, said several experts recently.
The Kingdom would possibly adopt an austerity budget or resort to its huge cash reserves, the experts were quoted as saying by a local newspaper.
The drop in the price of oil, which accounts for 90 percent of the Kingdom’s revenues, would see a budget of around SR800 billion, said Wadid Kabli, professor of economics at King Abdulaziz University.
The Ministry of Finance is poised to make budget estimates based on $50 per barrel to ensure revenues equal spending, he said.
Ihsan Bohaliga, an economics expert, said government might cut spending by 20 to 30 percent, or SR200 billion, compared to the 2014 budget. This would not affect mega projects, part of which have already been delayed or stalled in the previous budget plan, he said.
However, if the price of oil falls below $60 per barrel, the Kingdom may resort to reserves to allocate SR855 billion as an estimated spending target for 2015, he said.
A member of the Saudi Economy Association, Isam Khalifa, said it is likely that the government would base its budget on an oil price of around $65 per barrel, which means it would be 20 percent less in 2015 compared to 2014.
The second challenge would be an expected deficit due to huge spending plans, which might be covered by the country’s financial reserves worth SR3 trillion accumulated from previous surpluses.
The budget cuts would adversely affect investment spending and economic development in the Kingdom, notably in industrial cities, which would see less jobs created for the estimated 2 million unemployed in the country, he said.
Arab News
16 December
