Saudi Arabia expects to reduce spending as it seeks to shrink deficit

Saudi Arabia expects a 12% budget deficit for 2020, falling to 5.1% next year. (File: Reuters)
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Updated 01 October 2020

Saudi Arabia expects to reduce spending as it seeks to shrink deficit

 

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as the Kingdom seeks to reduce its deficit. It compares to spending of SR1.07 trillion this year it said in a preliminary budget statement.
It anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.
The Kingdom released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.
The unemployment rate among Saudis increased to 15.4 percent in the second-quarter compared to 11.8 percent in the first quarter of the year.
The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.
Saudi Arabia has already issued about SR84 billion in sukuk year to date.
“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. “This, in turn, has helped diversify its funding sources compared to what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year.”


Arrest warrants issued for founders of Panama Papers firm: report

Updated 6 min 55 sec ago

Arrest warrants issued for founders of Panama Papers firm: report

  • The Panama Papers, a massive data leak in April 2016, exposed widespread tax avoidance and evasion

BERLIN: Germany has issued international arrest warrants for the two founders of the firm at the center of the tax haven scandal exposed by the Panama Papers data leak, German media reported.
Mossack Fonseca founders Juergen Mossack and Ramon Fonseca, suspected of tax evasion and associating with criminals, will be arrested if they enter the European Union, German newspaper Sueddeutsche Zeitung reported late Monday.
The two men hold Panamanian passports and are currently in the Caribbean archipelago which does not have any extradition treaties, the newspaper said.
However, investigators hope that Mossack, who has family in Germany, may surrender to officials in order to negotiate a reduced sentence and avoid US charges.
The Panama Papers, a massive data leak in April 2016, exposed widespread tax avoidance and evasion using complex structures of offshore shell companies and caused an international outcry.
At least 150 investigations have been opened in 79 countries to examine potential tax evasion or money laundering, according to the American Center for Public Integrity.
In 2018, Mossack Fonseca said it would close due to “irreparable damage” to its reputation. Panama’s government meanwhile continues to petition the international community to remove it from several tax haven blacklists.