Saudi Arabia claims fall in record $53bn budget deficit

#Economy

Finance ministry says deficit will fall to $19bn, but figures are worse than previous forecast

The Riyadh stock exchange. Saudi Arabia is battling to cut a record budget deficit (AFP)
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Sunday 13 August 2017 14:56 UTC
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Saudi Arabia on Sunday claimed it it had cut a projected $53bn budget deficit by more than half, in figures released only months after officials claimed it would fall by a much larger amount.

The budget deficit dropped to $19.2bn in the first half of 2017, the finance ministry announced.

However in May, citing figures for the first quarter of this fiscal year, the ministry had said the deficit would fall to $6.93bn - a far larger cut.

The Gulf kingdom nevertheless welcomed the new figures.

"This result reflects an improvement in the management of public finances as a result of economic reform introduced through Vision 2030," said Saad al-Shahrani, a high-ranking ministry official.

The Vision 2030 plan, announced by the kingdom last year, aims to develop Saudi Arabia's industrial and investment base and boost small- and medium-sized businesses to create local jobs and reduce reliance on oil revenue.

It is the second budget report released by Riyadh since the authorities announced in May they would begin issuing the figures on a quarterly basis to boost transparency.

The kingdom has regularly posted budget deficits since 2014, following a slump in oil prices.

Revenues for the first half of the fiscal year were up 29 percent to $82.1bn from the same period last year.

Spending in the first six months dropped 2 percent to $100bn.

As part of its reforms, Saudi Arabia is due to introduce VAT in early 2018, along with the UAE and Qatar.

Three other Gulf states - Bahrain, Kuwait and Oman - plan to follow at a later date.

Riyadh announced in June it had begun taxing foreigners working in the private sector as part of its fiscal reforms.

The country is also preparing to sell just under five percent of energy giant Aramco next year.

Saudi Arabia raised $17.5bn in its first international bond offering in October 2016.