Riyadh (IINA) : Saudi Arabia projected a 33 percent reduction in the budget deficit for 2017.

In an extraordinary session in Riyadh on Thursday, the Council of Ministers said that next year’s budget deficit would be SR198 billion. Expenses next year will reach SR890 billion against revenues of SR692 billion. Oil revenues are estimated at SR480 billion, 46 percent higher than the 2016 projections. Non-oil revenues are estimated at SR212 billion, a SR13 billion increase over the 2016 projections, or 6.5%. It said this year’s deficit will be SR297 billion, down 8.9 percent from 2016’s original budget forecast. Revenues for this year are expected at SR528 billion, higher than projections a year ago of SR513.75 billion. Meanwhile, Custodian of the Two Holy Mosques King Salman on Thursday underlined the need for ensuring implementation of the general budget very carefully in a way achieving comprehensive and balanced development and improve the services being extended to the citizens. The King made the remarks in his speech while chairing the Cabinet session to approve the general budget. King Salman noted that the unveiling of the budget comes at a time when most of the countries are suffering from extremely volatile economic situations that led to slow pace in the global economic growth and drop in oil prices. “Despite its impact, our nation is dealing with these fluctuations so as not to affect the goals that we aspired to achieve,” the King was quoted by Saudi Press Agency (SPA) as saying.

The 2017 state budget is set to chart a course for the future that puts economic reforms on the agenda, coinciding with the country’s Vision 2030. A key objective of Vision 2030 is to reduce government spending and increase non-oil revenues to establish financial stability, diversify revenue sources, increase spending efficiency, focus on projects that have high returns and apply effective systems for performance monitoring and evaluation. The government continues to work toward achieving a balanced budget in 2020.

Throughout the past decade, the Kingdom has built a strong financial position by accumulating reserves during the period of high oil prices. This helped the country manage local and global economic volatility as well as oil price fluctuations. The Kingdom was able to significantly increase its reserves and reduce the national debt to increase future borrowing capability, with the national debt amounting to only SR44 million or 1.7% of GDP at the end of 2014.

However, due to the decline in oil prices, the government needed to finance its budget deficit partly by issuing local and international debt instruments with a value of SR 200.1 billion in 2016, in addition to drawing from reserves. The Kingdom’s revenues were impacted by fluctuations in the price of oil. The financial strategy in the medium term aims to achieve a balanced budget by 2020 by increasing non-oil revenues, benefiting from efficiency savings on expenditures and ensuring greater fiscal discipline.

The main pillar for effective national financial management will be to provide more transparency primarily through a clear and comprehensive fiscal reform program over the next five years. These measures will increase financial stability and limit the effects of oil price fluctuations on the Kingdom’s financial position.