Reuters - Video

Edition: US | UK | IN | CN | JP

video Video

Saudi budget slashes deficit to boost spending

Thursday, December 22, 2016 - 02:28

Saudi Arabia says it’s managed to reduce its record budget deficit this year. The Middle East’s largest economy also says it’ll spend more in 2017 to try and boost slowing economic growth. Nawied Jabarkhyl reports.

▲ Hide Transcript

View Transcript

It's been a tough old year for Saudi Arabia. Faced with a record budget deficit of $98 billion last year, mainly due to a plunge in oil prices, the government has embarked on reforms to try and bring down spending and find new ways to raise money. Central to that, is Vision 2030 - an ambitious plan announced in April by influential Deputy Crown Prince Mohammed Bin Salman - designed in his words, to end the country's "addiction" to oil, as well as boost the private sector. (SOUNDBITE) (English) GULF LABOUR MARKET ECONOMIST, DAVID JONES, SAYING: "If you consider where we are today and where the plan says we want to be in the future, it's actually I would say, quite a fundamental rework of the employment landscape, the way that business takes place within the Kingdom, and in many cases, the social contract that the Kingdom has with its citizens. All will be quite fundamentally changed." Over the past year, the Kingdom has reviewed or cancelled numerous infrastructure projects to bring down costs. It's also cut energy and other subsidies for citizens - and in a politically sensitive move, decided to cut public sector benefits. All of which have had an impact on ordinary Saudis, like the ones we spoke to in Riyadh. (SOUNDBITE) (English) SAUDI CITIZEN, MAMDOUH AL-ONAIAZI, SAYING: "In the past, all the dependence was on oil, but now the economy's becoming more reliant on local and global trade. There must be change and we ourselves must change as well." (SOUNDBITE) (English) SAUDI CITIZEN, MOHAMMED, SAYING: "In 2016 as you know, the prices are high and life is a little difficult with the reduction in salaries and the crisis that has happened. We say God willing, that 2017 will be better." But, the austerity appears to be working. This year's budget, announced on Thursday, shows the deficit has been reduced to $79 billion - a reduction of almost 25%. Going forward, the Kingdom says it'll raise spending in 2017 to try and boost economic growth. It expects to spend $237 billion next year - 6% more than it planned on spending in 2016. Officials think that'll have a positive impact on GDP, which slowed to 1.4% this year. Meanwhile, revenues may be boosted next year by higher oil prices, after Saudi Arabia and other oil producers agreed to cut production from January.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Saudi budget slashes deficit to boost spending

Thursday, December 22, 2016 - 02:28