Saudi Arabia announced a 990-billion-riyal ($263.91 billion) budget for 2021 on Tuesday, seeking to tame a huge deficit caused by lower oil revenues and extra spending needed to tackle the coronavirus crisis.
The world’s biggest oil exporter expects to post a deficit of 298 billion riyals this year, or 12% of gross domestic product (GDP), and 141 billion riyals or 4.9% of GDP next year, according to a budget statement.
The Saudi finance ministry said the budget aimed to provide assurance about the government’s ability to manage the crisis and gradually restore economic growth.
“The budget also reflects the ability to adopt appropriate policies to balance between growth, economic stability and fiscal sustainability in the medium and long term,” it said in a statement.
Saudi Arabia expects the economy to shrink by 3.7% this year but to swing back to a 3.2% growth next year.
Saudi Arabia tripled a value-added tax in July to 15% to boost state coffers and offset the drop in oil revenues.
In televised remarks, Finance Minister Mohammed Al-Jadaan said VAT will be reviewed when the economic circumstances allow, adding there were no plans to revise it on short to medium term.
He noted that the recovery in Q3 and Q4 bodes well for better economic indicators in 2021, stressing that most economic sectors have started to recover from the pandemic's impact.
This year revenues are estimated at 770 billion riyals and 849 billion riyals next year, the budget statement said.
For 2020, it estimated oil revenues at 412 billion riyals after budgeting 513 billion riyals and estimated non-oil revenues at 358 billion riyals after budgeting 320 billion riyals.
Al-Jadaan said the Kingdom is still aiming to bring deficit down to less than 1% by 2023.
He stated the Public Investment Fund plays pivotal role in developing the Saudi economy and will inject more investments of hundreds of billions of riyals in 2021 and ensuing years.
