Saudi Arabia trims 2020 spending amid oil crash

Thank you for reading the news about Saudi Arabia trims 2020 spending amid oil crash and now with the details

Aden - Yasmine El Tohamy - Saudi Arabia is bracing for an economic slump after it shut down cinemas, malls and restaurants, suspended the year-round Umrah pilgrimage and locked down eastern Qatif region - home to around 500,000 people - in a bid to contain the deadly coronavirus.

The world's top crude exporter also faces plunging oil prices, the mainstay of government revenue, which slipped below $25 a barrel this week to touch 18-year lows on the back of sagging demand and a price war with Russia.

"The size of the partial reduction... has reached approximately 50 billion riyals ($13.32 billion), which represents less than 5 percent of the total expenditures approved in the budget for 2020," said Finance Minister Mohammed al-Jadaan.

In a statement released by the official Saudi Press Agency late Wednesday, the minister added the cuts would have "the least social and economic impact".

But the economic consultancy Nasser Saidi and Associates has reported the cuts will be deeper, saying the finance ministry has instructed various government bodies to submit proposals to slash this year's spending by 20 to 30 percent.

The Energy Intelligence Group says the kingdom has asked government bodies to prepare budget scenarios in which crude prices could drop as low as $12-$20 per barrel.

The deep-pocketed kingdom, with fiscal reserves of around $500 billion, has reiterated it is an ultra-low-cost producer of crude and can withstand low prices for years.

But Riyadh has posted a budget deficit every year since the last oil price rout in 2014. It has borrowed over $100 billion and drawn from its reserves to plug the deficit.

Read more: Mohammed bin Salman's insatiable lust for power could sink Saudi Arabia

Late last year, the kingdom projected a budget deficit of $50 billion in 2020 as spending was projected at $272 billion.

The budget shortfall is expected to jump substantially as crude prices decline.

Saudi Arabia needs a crude price of about $80 a barrel to balance its budget.

Follow us on , Twitter and Instagram to stay connected

These were the details of the news Saudi Arabia trims 2020 spending amid oil crash for this day. We hope that we have succeeded by giving you the full details and information. To follow all our news, you can subscribe to the alerts system or to one of our different systems to provide you with all that is new.

It is also worth noting that the original news has been published and is available at The New Arab and the editorial team at AlKhaleej Today has confirmed it and it has been modified, and it may have been completely transferred or quoted from it and you can read and follow this news from its main source.

PREV Economic / Saudi Digital Academy launches “Himma Camp for Digital Products...
NEXT Improving the urban perimeter of Wadi Al-Aqiq