Saudi Arabia 'reconsidering' $20bn worth of public projects

Saudi Arabia 'reconsidering' $20bn worth of public projects
Deficit worries have Riyadh weighing the benefits of slashing billions in construction plans and other public projects.
2 min read
07 September, 2016
Low oil prices have hit Gulf economies hard [AFP]
Saudi Arabia is said to be considering cancelling more than $20 billion of projects and slashing ministry budgets by a quarter, Bloomberg reported Tuesday citing unnamed sources close to the matter.

According to the sources, Riyadh is reviewing thousands of projects that come to a combined value of around $69 billion, with a view of cancelling a third of them. A plan is also said to be in place that may result in the merging of some Saudi government ministries.

The Finance Ministry declined to give a comment to the US financial news outlet, while officials from the Ministry of Economy and Planning "weren't available" to confirm or deny the claims.

These reports come as the Middle East's richest nation continues to rein in its budget shortfall that climbed to an unprecedented 16 percent of gross domestic product last year.

Thus far, this has resulted in the reduction of fuel and utility subsidies in a kingdom that had long become used to state handouts drawn from oil profits.

According to the International Money Fund, this shortfall will drop below 10 percent GDP in 2017.

Saudi Arabia's economic shakeup, dubbed 'Saudi Vision 2030' by Riyadh, aims to see the country transition into post-oil economy within the coming decades.

This ambitious initiative aims to more than triple non-oil revenues by 2020 to 530 billion Saudi riyals [$141.33 billion].

At present, however, the sore state of Saudi public finances have hampered the expansion of the country's economy, with non-oil GDP having contracted in the first quarter of 2016.