Saudi Arabia declares $98 billion budget deficit in 2015

PanARMENIAN.Net - Saudi Arabia said Monday, December 28 that this year's budget deficit amounted to $98 billion as lower oil prices cut into the government's main source of revenue, prompting the kingdom to scale back spending for the coming year, the Associated Press reports.

For the third consecutive year, the kingdom said it will post a budget shortfall in 2016, projecting a deficit of $87 billion. The government said it projects expenditures of $224 billion in 2016, roughly $5 billion less than what the government projected in 2015.

The budget is being watched closely by investors to see how the government plans to consolidate years of heavy spending when oil prices were more than double what they are now. Benchmark U.S. crude was trading Monday at $37.46 per barrel on the New York Mercantile Exchange.

The kingdom announced projected revenues for the coming fiscal year of $137 billion, around $26 billion less than the total for 2015. As is typical for the published version of the budget, it did not include a projected oil price.

Next year's budget suggests Saudi Arabia is basing its revenue on a price of $26 a barrel for export crude, if production remains at 10.2 million barrels per day, said Fahad Alturki, chief economist and head of research at Saudi-based Jadwa Investment. That's less than half the $56 per barrel priced into the projected 2015 budget.