Saudi Arabia unveiled a new budget for the 2021 year, cutting spending to rein in a fiscal deficit brought on by a lower oil prices in 2020 and adjusting the Kingdom’s fiscal strategy to a post-Coronavirus pandemic era.
Here’s what you need to know, compiled with reports from agencies and local sources:
-TOTAL BUDGET SPENDING: Saudi Arabia’s announced budget for 2021 is 990 billion riyals ($263.91 billion)
-REDUCTION FROM 2020: The figure announced today by Saudi Arabia’s Ministry of Finance is around 7% less than estimated spending for the current year.
-DEFICIT: The Kingdom expects to run a deficit this year of 298 billion riyals ($79 billion), or, 12% of gross domestic product (GDP).
-CRUDE OIL REVENUES: Saudi Arabia expects crude revenues to drop by over 30%, the leading cause of the budget challenges for the Kingdom in 2021. This year revenues are estimated at 770 billion riyals ($205 billion) and 849 billion riyals ($226 billion) next year, the budget statement said.
-DEBT INCREASE: Saudi Arabia expects public debt to increase to 937 billion riyals ($250 billion) next year from 854 billion riyals ($228 billion) this year, an increase of 83 billion riyals ($22 billion).
-RESERVE DRAWDOWN: The Ministry of Finance expects government reserves at the Saudi central bank to drop to 280 billion riyals ($75 billion) next year from an estimated 346 billion riyals ($92 billion) this year.
-ECONOMY: Saudi Arabia expects the economy to shrink by 3.7% this year but to swing back to a 3.2% growth next year.
-BALANCE BUDGET TIMELINE: The Kingdom plans to nearly balance its budget by 2023.
Crown Prince Mohammed bin Salman.
Saudi Arabia’s Vision 2030 strategy to diversify the economy is being credited as a significant value-add during the unforeseen twin shocks of a drop in low oil prices and the global Coronavirus pandemic.
“I think that the economic recovery of economic activities in the third and fourth quarters bodes well for economic growth in the coming years,” Saudi Arabia’s Minister of Finance Mohammed Al-Jadaan said.
Announcing the 2021 budget, King Salman said Saudi Arabia’s authorities have “directed that the budget give priority to protecting the health and safety of citizens and residents, and to continue efforts to limit the effects of the pandemic on our economy.”
Crown Prince Mohammed bin Salman said 2020 had been a difficult year for the whole world due to the coronavirus pandemic, “but the Kingdom’s economy has proven its ability to withstand its impact.”
