Saudi Arabia will continue spending on development projects and social benefits in its 2015 budget despite “challenging” global economic conditions, Finance Minister Ibrahim Alassaf said on Wednesday, state news agency SPA reported.
The world’s top oil exporter is believed to need an average crude price above $90 a barrel to balance its budget this year, but benchmark Brent crude fell to $59.27 a barrel on Tuesday so current levels of spending may not persist next year.
Economists believe Saudi Arabia’s 2015 budget plan, which Alassaf said he had submitted to the Supreme Economic Council and is expected to be announced on Monday, will forecast a deficit for the first time since 2009.
Saudi Oil Minister Ali Naimi last week shrugged off suggestions that Saudi Arabia would cut oil production to shore up prices, saying “why should we cut production?”.
Alassaf said the Kingdom’s “counter-cyclical” fiscal policy, which helped build up net foreign assets of $734 billion when oil prices were high in the last few years, would continue in the 2015 budget and beyond.
“This policy…will enable the government to continue carrying out massive development projects and spending on development programmes, particularly in the sectors of health, education and social services,” he said.
He added that spending on the military and Saudi security would not be affected, and that the coming budget was expected to achieve positive economic growth.
The Saudi stock market has plunged in the last several weeks partly because investors fear any state spending cuts would slow the economy and corporate profit growth.