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Saudi Arabia forecasts record budget deficit amid low oil prices

© Fayez Nureldine, AFP | An investor monitors the stock exchange at the Saudi Stock Exchange, or Tadawul, in the capital Riyadh on June 15, 2015

Text by FRANCE 24

Latest update : 2015-12-28

Saudi Arabia on Monday announced a projected budget deficit of $87 billion (€79 billion) in 2016, as lower oil prices have cut deep into the government's main source of revenue.

Over the past year, lower oil prices have forced the Saudi government to dig into its large foreign reserves to cover the difference between its spending and revenue.

In its announcement on Monday, however, the kingdom’s finance ministry said it projects spending of $224 billion in 2016 versus $137 billion in revenue.

In a bid to offset the record gap, the government said it would raise petrol prices by up to 40 percent from Tuesday. It also said it would increase for electricity, water, diesel and kerosene, the official SPA news agency reported.

Raising charges

In addition, the kingdom's finance ministry said it is considering plans to raise charges for public services.

In remarks broadcast on Saudi Arabia's state news channel on Monday, King Salman reassured the public at a government meeting that the priority remains developing and investing in social programmes.

Benchmark US crude was trading Monday at $37.46 per barrel on the New York Mercantile Exchange.

(FRANCE 24 with AP, AFP)

Date created : 2015-12-28

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