Saudi Arabia’s financial position is very strong despite the plunge in oil prices since last year, and the kingdom is focusing spending on economic development projects to stimulate the private sector, Finance Minister Ibrahim Alassaf said on Tuesday.
In a speech to a major financial conference, Alassaf also said he was optimistic that the global economy was emerging from its slump, citing indicators from Europe and Japan. But he added that one couldn’t expect a return to growth levels of 10 years ago.
Low oil prices are a challenge to oil exporting countries in general, including Saudi Arabia, but Riyadh is able to use its spending to avert the negative impact, Alassaf said.
He said a new Council of Economic and Development Affairs, created by King Salman on taking the throne in January, would help to accelerate decision-making and support government efforts to improve the business environment.
Because of cheap oil, the government has projected a record budget deficit of $38.7 billion for 2015 and has started running down the central bank’s huge foreign currency reserves to cover the gap.
Private economists in a Reuters poll published last week expect Saudi gross domestic product to grow a median 2.6 per cent in 2015, down from 3.6 per cent last year.