Saudi budget deficit forecast to remain high

Rasa - Fitch Ratings says the budget deficit of Saudi Arabia will remain high until at least 2018 in what could be a fresh indication that the economic troubles of the world’s biggest crude oil exporter will still continue to suffer from the impacts of low crude prices.

News ID: 423441

Date: 11 September 2016 - 22:14

RNA - The ratings agency said the budget deficit of Saudi Arabia is likely to be 11.2 percent and 6.8 percent of GDP respectively this year and next. It is expected to fall to 2.4 percent in 2018.

The improvement of the deficit will primarily be the result of rising oil prices, but the government's National Transformation Programme (NTP), presented in June, will also have an important impact, the agency said as it affirmed Saudi Arabia's long-term foreign and local currency issuer default ratings (IDRs) at 'AA-' with negative outlooks.

Fitch said during the first seven months of 2016, overall government deposits at the Saudi Arabian Monetary Agency (SAMA) declined SR92 billion to SR1,070 billion or around 46 percent of GDP, Arabianbusiness.com reported.

It added that general government debt is likely to rise to 14.7 percent of GDP by end-2016, from just 1.6 percent in 2014 but still well below the 'AA'-category median of 38.7 percent.

The International Monetary Fund (IMF) said in April that the Saudi economy will only grow by 1.2 percent in 2016, the lowest in seven years, and by 1.9 percent next year.

The grim forecast for the Saudi economy comes despite the austerity measures taken by the kingdom last year to cut spending and boost non-oil revenues after posting a record budget deficit of $98 billion last year.

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