Saudi to cut up to $20bn of projects

Saudi Arabia is reportedly planning to cut billions of dollars worth of projects to narrow its budget deficit.

The Financial Times cited sources as saying the Saudi government has hired consultancy firm PwC to identify between SAR50bn and SAR75bn ($13bn-$20bn) of savings.

It said the focus of the cuts would be on capital expenditure including infrastructure projects rather than unpopular austerity measures due to political sensitivity.

“PwC will be doing big number crunching, lots of accountancy work trying to understand the liabilities the ministries already have, who is doing what, and where the cuts can most easily be made,” an executive aware of the contract was quoted as saying.

Both sides declined to comment.

The review is expected to span the transport, health and municipal services and is considered another blow to construction firms, including Saudi Oger and Saudi Binladin, that were hit hard by delayed payments last year.

Read: Construction firm Saudi Oger faces huge debt restructuring

The kingdom’s finance ministry has said it will finalise SAR105bn in late payments by February.

The value of infrastructure contracts awarded in the Gulf last year fell 44 per cent to $100bn, compared to $178bn in 2015, according to MEED.

Saudi Arabia announced increases to fees for residency visas and new charges for expats’ dependents as part of its 2017 budget.

Read: New fees for Saudi expats’ dependents payable from July

But it has sought to shield its citizens from austerity measures through a new fund for Saudis earning less than SAR21,000 a month.

Read: Citizens fund open to Saudis earning less than $5,599 a month from Feb

The government successfully reduced its budget to SAR297bn ($79bn) in 2016 from SAR376bn the previous year but is still being heavily impacted by the reduction in oil prices.

Read: Saudi Arabia cuts 2016 budget deficit, to boost 2017 spending