S. Arabia will Borrow  to Finance Soaring Deficit
World Economy

S. Arabia will Borrow to Finance Soaring Deficit

The Saudi budget deficit will be more than twice its own forecast, a leading research firm has said, forcing the country 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, Albawaba reported.
The country 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 country 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 neighboring 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.


Short URL : http://goo.gl/gxvTSr

You can also read ...

Google and Walmart are set to start a partnership through which thousands of Walmart products are offered through the Google Home voice-controlled speaker.
Lowe’s Inc the number-two US home improvement retailer,...
Lowe’s Q2 Profit Jumps 21.6%
Lowe’s Inc the number-two US home improvement retailer,...
There were rallies on Wall Street overnight due to US President Donald Trump’s comments.
Asian indexes put in mixed performances on Wednesday following...
Toshiba, Western Digital Start Talks on Memory Sale
Toshiba has begun negotiations with business partner Western...
Blackstone Explores $7b IPO of Gates Global
Private equity firm Blackstone Group LP is exploring an...
Italian 10-year yields climbed 6 basis points to  a 3-1/2-week high at 2.17%
Eurozone bond yields rose on Wednesday, with Italian yields...
Identity Fraud Soars to New Highs in UK
Cifas, the UK’s leading fraud prevention service, has released...
China Court Awards US Co. $1.5m in Court Case
A Chinese court has ordered three domestic shoemakers to pay...