World Economy

Saudi Q1 Deficit Near $7 Billion

Saudi Q1 Deficit Near $7 Billion
Saudi Q1 Deficit Near $7 Billion

Saudi Arabia’s deputy economy minister said on Saturday the kingdom had reduced its deficit in the first quarter of 2017 by more than half in part because of prudent public spending.

“The fact that the first quarter deficit was 26 billion riyals ($6.93 billion) when 54 billion riyals was projected at the beginning of the year. This is a very excellent step toward rationalized spending,” Mohammed al-Tuwaijri, deputy minister of economy and planning, told state-run Ekhbariya TV, Reuters reported.

Saudi deficit shrank to 297 billion riyals ($79 billion) in 2016, down from a record 367 billion-riyal gap in 2015. In its 2017 budget plan, Riyadh said the deficit would shrink further this year to 198 billion riyals because of higher oil prices and non-oil revenues.

The Saudi central bank governor also told state-run TV on Saturday that the kingdom’s foreign currency reserves were healthy, representing 80% of GDP, and that the country’s trade deficit could drop this year amid a decline in imports.

Meanwhile, Saudi Arabia may offer “almost interest-free” loans to companies in labor-intensive industries, as part of a plan to stimulate an economy squeezed by low oil prices and spending cuts, Finance Minister Mohammed al-Jadaan said.

Al-Jadaan, speaking in an interview in Washington, also said the government is on track to slash its budget deficit by 30% this year to about 200 billion Saudi riyals ($53 billion), and aims to finance it mainly through debt sales instead of drawing on reserves. This means the kingdom will likely tap global bond markets again this year after raising $9 billion from its debut Islamic debt sale, he said.

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