Saudi Arabia plans spending cuts in 2021 as economy recovers: Report

Saudi Arabia said its spending plans for next year would be expansionary, as it leans more heavily on government-controlled funds to make up for cuts to a finance ministry budget battered by a decline in oil prices and the coronavirus pandemic.

The kingdom will stick to its plan to cut spending by 7.3 per cent in 2021 after its deficit widened dramatically this year, according to an annual budget statement released Tuesday. Spending is projected at 990 billion riyals ($264 billion). Revenue is expected to rise to 849 billion riyals. The budget deficit is expected to narrow to 141 billion riyals, or 4.9 per cent of economic output, compared to nearly 300 billion riyals, or 12 per cent of gross domestic product, this year.

Finance Minister Mohammed Al-Jadaan said Saudi wealth funds were expected to spend 100s of billions of riyals in the local economy in the coming years, even as the government’s direct expenditure drops.

“We still believe we are not out of the woods yet and we wanted to make sure we had enough financing for the health service and make sure we are prepared for a wave two, God forbid, to hit Saudi Arabia,” Jadaan said in an interview with Bloomberg Television. The budget “is expansionary.