Saudi Arabia Faces $38 Billion Budget Deficit

Saudi Arabia, the world's largest crude oil exporter, announced on Thursday, December 25, that it is facing a significant budget deficit of $38.6 billion for the year 2015. According to AFP, Saudi Arabia attributed this deficit to the 'sudden drop in oil prices.' The Riyadh government informed Saudi citizens in a statement read on national television that forecasts indicate the country will have expenditures of $229.3 billion in 2015 'while the revenue from oil sales is estimated at 715 billion Saudi riyals ($190.7 billion).' Accordingly, Saudi Arabia's expenditures for 2015 are slightly higher than previously announced. Before the new government statement, the total expenditures for Saudi Arabia in 2015 were estimated at 855 billion Saudi riyals, while the latest government statement increased this figure to 860 billion riyals. On the other hand, Riyadh's net income from oil sales is 140 billion Saudi riyals lower than the estimates for the same figure in 2014. This is the first time since 2011 that the Kingdom of Saudi Arabia has faced a budget deficit. The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the largest producer, decided last month to maintain a production ceiling of 30 million barrels per day despite falling oil prices. Ali al-Naimi, Saudi Arabia's oil minister, stated that even if oil prices drop to $20 per barrel, OPEC will not reduce its production. Oil prices, which account for half of Saudi Arabia's revenue, have lost half their value since June due to oversupply, declining global demand, and a rising dollar. Ibrahim al-Assaf, Saudi finance minister, stated this month in Riyadh that despite the drop in oil prices, the country will not adjust its annual budget. Al-Assaf added that the new budget is announced in a context where the global economic situation is 'challenging,' but the country's years of currency reserves provide a 'safe margin and a good line of defense that will be useful in times of need.'