RIYADH: Saudi Arabia hopes a bumper budget unveiled on Tuesday will revive the economy, with record levels of government spending intended to spur growth.
The government aims to boost spending by about 7 percent in 2019, despite a continuing budget deficit — the shortfall in revenues compared to expenditure.
King Salman said the budget was the largest in the Kingdom’s history, and one designed to achieve financial stability.
“We are determined to go ahead with economic reform, achieving fiscal discipline, improving transparency and empowering the private sector,” he said.
Crown Prince Mohammed bin Salman, who is behind the Vision 2030 program to reform the economy, said the government would continue to “diversify the sources of income and consolidate fiscal sustainability through boosting non-oil revenues.”
Non-oil revenues increased to $77 billion this year and are estimated to reach $83.5 billion — or around one third of total revenues.
Minister of Finance Mohammed Al-Jadaan said the budget announcement, along with a speech by King Salman pledging to continue paying allowances to citizens, marked a “historic day” for the Kingdom.
Government spending is projected to rise to 1.106 trillion riyals ($295 billion) next year, up from an actual 1.030 trillion riyals this year, Al-Jadaan said at a briefing in Riyadh.
The budget estimates a 9 percent annual increase in revenues to 975 billion riyals, mostly from oil. The deficit is forecast at 131 billion riyals for next year, a decline on 2018.
Saudi Arabia has been working to diversify its economy away from oil, by promoting the private sector, as well as increasing the prices of fuel and energy and imposing a value-added tax.
Government coffers have also been given a boost by Saudi Arabia’s clampdown on corruption late last year, in which scores of top officials and business executives were detained at the Ritz-Carlton hotel in Riyadh.
Al-Jadaan said the government had collected about 50 billion riyals this year in settlements, and he expected collections to continue next year.
Investigators said this year they aimed to seize about $100 billion overall.
The minister said Saudi Arabia was working to fulfil payments owed by the government to private contractors. “The government is seeking to settle any dispute with the private sector with regard to the due payments,” he said.
Saudi Arabia, long reliant on oil revenues, has suffered a budget deficit every year since 2014, when a slump in energy prices lowered state income.
Its 2019 budget announcement came as world oil prices tumbled to new one-year lows, amid concerns over demand.