The Kingdom of Saudi Arabia has announced a budget of $263.91 billion for 2021, media reports said. The Kingdom will spend 7 percent less in 2021 than the estimated spending for this year. This is a result of the deficit caused by the turmoil in the oil prices as Saudi Arabia is the biggest exporter of oil in this world.
The Kingdom said in a statement that it expects to post a deficit of 298 billion riyals this year, or 12 percent of gross domestic product (GDP) as crude revenues are slated to drop by over 30 percent. and 141 billion riyals or 4.9 percent of GDP next year.
Finance Minister Mohammed Al Jadaan told the media, “We still believe we are not out of the woods yet and we wanted to make sure we had enough financing for the health service and make sure we are prepared for a wave two, God forbid, to hit Saudi Arabia. The budget is expansionary. We wanted to make sure that we stimulate the economy and support growth and diversification. It doesn’t need to be just through government expenditure.”
The Kingdom expects the economy to shrink by 3.7 percent this year due to the drop in oil demand and the coronavirus. However, the economy is expected to swing back to a 3.2 percent growth next year. The Kingdom will continue to play an effective role in achieving stability in the oil market and implement its plan for economic diversification, the budget statement said.