Saudi Arabia, the Arab world’s largest economy and biggest oil exporter, may record a budget deficit of $30 billion this year, according to an HSBC Holdings note obtained by news agency Bloomberg on Tuesday.
The report, written by Dubai-based economist, Simon Williams, says the kingdom may post a record budget deficit next year too.
The forecast is almost double the government’s own estimate of 65 billion riyals ($17 billion) made in its budget statement last December and reflects an increase in spending as oil revenues tumble.
The government is committed to a five-year $400 billion spending programme to improve infrastructure and create jobs to stimulate the economy.
Williams noted that by drawing on its overseas asset stock to fund the fiscal shortfall, rather looking to the local debt market or to the banks, the Saudi government could avoid crowding out the private sector.
On Monday the Saudi Arabian Monetary Agency (SAMA) reported net foreign assets stood at 1.541 trillion riyals ($410.93 billion) in March, down from 1.585 trillion riyals in February.
Although SAMA’s foreign assets rose by about 19 percent in March from their level a year earlier, they were still at their lowest level since July, 2008.
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