saudi to borrow to finance soaring deficit
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
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For the first time in more than a decade

Saudi 'to borrow to finance soaring deficit'

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Arab Today, arab today Saudi 'to borrow to finance soaring deficit'

Hit by plunging crude prices, Saudi Arabia will post a deficit of $106 bn
Riyadh - Arab Today

The Saudi budget deficit will be more than twice its own forecast, a leading research firm has said, forcing the kingdom into the debt market for the first time in more than a decade.
Hit by plunging crude prices, the world's biggest oil exporter will post a deficit of $106 billion, compared with a government projection of $39 billion, Saudi firm Jadwa Research said in a report released late Tuesday.
The kingdom that exports 7.0 million barrels per day on average will see oil revenues fall by 35 percent to $171.8 billion in 2015, the quarterly report said.
Total revenues are forecast down 33.7 percent at $185 billion, while public spending is expected to remain almost unchanged at $290.9 billion.
Jadwa said the government is highly expected to return to the debt market for the first time in around 15 years despite its massive reserves.
"The government is now expected to issue debt as part of its deficit financing strategy," it said.
Saudi Arabia has massive foreign reserves, which stood at $714 billion at end February, but Jadwa said borrowing would eliminate the need for the  reserves to be the sole source of deficit financing.
The kingdom is also forecast to post a current account deficit of $23.1 billion, its first shortfall since 1998, after registering an $81 billion surplus last year.
A large chunk of the forecast deficit -- around $30 billion -- is a result of new King Salman having granted Saudi workers two months extra pay.
The report did not take into account the eventual cost of the Saudi-led war in neighbouring Yemen.
Nor did it consider a possible cut in crude production to accommodate the expected rise of Iranian oil output if it reaches a final nuclear deal with Western powers.
Jadwa's forecasts were based on a 2015 oil price of  $57 a barrel and an average daily production of 9.8 million bpd, up 200,000 bpd from last year.
Source: AFP

 

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