Saudi Arabia projected its 2020 budget deficit will soar to around $79 billion, the finance ministry said Tuesday, as the world’s top crude exporter reels from a coronavirus-led economic downturn.
“It is expected that the budget deficit will increase at the end of 2020 to about 298 billion riyals, and we aim to reduce it by the end of 2021 to 141 billion riyals ($37.6 billion),” the finance ministry said in its annual budget.
Late last year, the kingdom projected a budget deficit of $50 billion for 2020, up $15 billion on 2019.
Riyadh has posted a budget deficit every year since the last oil price rout in 2014, prompting the petro-state to borrow heavily and draw from its reserves to plug the shortfall.
The kingdom is tightening its belt and pressing ahead with austerity measures amid low oil prices.
Saudi Arabia plans to spend 990 billion riyals ($264 billion) in 2021, a sharp reduction compared to this year, according to the budget statement.
Oil income contributes to more than two-thirds of Saudi public revenues.
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In November, energy giant Aramco, Saudi Arabia’s cash cow, posted a 44.6% slump in profits for the third quarter, as the coronavirus pandemic weighs heavily on the global demand for crude oil.
Saudi Arabia needs a crude price of about $80 a barrel to balance its budget, economic experts say, higher than the current price of around $50.
A drop in state revenues is expected to hinder Crown Prince Mohammed bin Salman’s ambitious “Vision 2030” reform programme to overhaul the kingdom’s energy-reliant economy.