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Tue 23 Dec 2008 03:30 PM

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Financial reserves can absorb bigger deficit: Saudi

Finmin says reserves can compensate if oil prices fall below level assumed in budget.

Saudi Arabia's financial reserves are "healthy and big" enough to absorb a budget deficit bigger than the $16 billion shortfall forecast for 2009, Finance Minister Ibrahim al-Assaf said in remarks broadcast on Tuesday.

"Even if oil prices were to fall to levels below those assumed in the budget, we have built up very healthy and big reserves that can cover more than the deficit that we have forecast," he told Al Arabiya television.

Assaf noted that the "estimates of revenue were conservative", but did not give the price of oil on which the kingdom based its budget. Oil is the main revenue earner of the world's top oil exporter.

The 2009 budget suggests an assumed price of around $43 a barrel for US crude and $37 a barrel for Saudi oil, SABB bank said.

The kingdom projected a budget deficit of 65 billion riyals ($16 billion) in 2009 as it raised expenditures to an expected 475 billion riyals, while revenues are projected to fall to 410 billion riyals.