Large deficit, due to plunging oil prices, will be covered with existing fiscal reserves, the Ministry of Finance said
Saudi Arabia plans to raise government spending 0.6 percent to a record high in its 2015 budget while covering a large deficit due to plunging oil prices with its huge fiscal reserves, the Ministry of Finance said on Thursday.
The budget gives the first detailed look at how the world's top oil exporter intends to handle an era of cheaper oil.
The stock market rose in the minutes after the announcement, trading 0.9 percent higher.
Financial markets had feared the kingdom might cut spending sharply, but the plan suggests Saudi authorities are confident of their ability to ride out a period of low oil prices and see no need for major austerity.
Some analysts believe Riyadh is content to see oil prices fall as a way to squeeze out competing producers in non-OPEC nations. The budget figures imply it could pursue this strategy for years if it felt that was necessary.
Spending in the 2015 budget is projected at 860 billion riyals ($230 billion), up from 855 billion in the 2014 budget plan. While that is a record amount, it is the smallest increase in more than a decade.
Revenues were projected to drop to 715 billion riyals in 2015 from 855 billion in the 2014 plan, leaving a deficit of 145 billion.
In the last six months, Brent crude oil has dropped from around $115 a barrel - a level at which the kingdom was raking in giant budget surpluses - to just above $60.
But government reserves at the central bank totalled 905 billion riyals at the end of October, enough to cover deficits of the size projected in 2015 for about six years, even excluding the government's other assets and its ability to borrow.
Saudi Arabia will continue spending actively on economic development projects, social welfare and security despite the oil price slide and challenging conditions in the global economy, the ministry said.