Saudi Arabia faces US$98 billion deficit as oil revenue drops

THE global plunge in oil prices and higher than targeted spending is likely to result in Saudi Arabia posting a budget deficit of SAR367 billion (US$98 billion).

Spending is expected to reach SAR975 billion in 2015, overshooting the government's target by 13 per cent, Saudi official Hindi Al-Suhaimi said in Riyadh. 

Actual revenue was SAR608 billion, compared with a forecast of SAR715 billion at the beginning of the year, Bloomberg reported.

The deficit is reckoned at 16 per cent of GDP, according to senior economist at National Bank of Abu Dhabi, Alp Eke. The median estimate of 10 economists in a Bloomberg survey was a shortfall of 20 per cent.

"The economic council worked to strengthen the efficiency of non-oil revenue," preventing the deficit from reaching as high as SAR500 billion," Mr Al-Suhaimi said.

The government is set to announce the 2016 budget early this month, which will be the first under King Salman who ascended to the throne in January last year.