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Mon 9 Jan 2017 02:17 PM

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Saudi Arabia said to be mulling cancellation of $20bn projects

Gulf kingdom has reportedly hired PwC to review $69bn of gov't contracts with a view to cutting about a third of them

Saudi Arabia said to be mulling cancellation of $20bn projects
(Fayez Nureldine/AFP/Getty Images)

Saudi Arabia is reportedly working with PricewaterhouseCoopers on plans to cancel about $20 billion of projects as the Gulf kingdom battle with lower revenues amid lower oil prices.

Bloomberg reported on Monday that Ministry of Economy and Planning has appointed PwC to review $69 billion of government contracts with a view to cutting about a third of them, citing two people familiar with the matter.

It said that projects under review include contracts awarded by the ministries of housing, transport, health and education.

Bloomberg reported that PwC declined to comment, while a spokesman for the Ministry of Economy didn’t immediately respond to requests for comment.

Last month, Saudi Arabia said it had successfully cut into its huge state budget deficit this year and will increase government spending in 2017 to boost flagging economic growth.

The deficit shrank to 297 billion riyals ($79 billion) in 2016. That was well below a record 367 billion gap in 2015, and below the government's projection in its original 2016 budget plan of a deficit of 326 billion riyals.

The financial challenges for Saudi Arabia stem largely from the fall in the global price of oil.

Riyadh slashed spending on infrastructure and perks for civil servants to get its finances under control. For the first time in years, it kept its spending below its original budget projection in 2016; actual spending was 825 billion riyals compared with a projection of 840 billion riyals.

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