Saudi’s 2020 budget: Austerity and conservation

Saudi’s 2020 budget: Austerity and conservation

Dec 19, 2019

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The highest budget has been allocated respectively in the education, military and health sectors. 19 percent of Saudi Arabia’s next year’s budget is worth $ 51.5 billion in education spending, and 16 percent in the health sector’s $ 44.5 billion.

Saudi Arabia announced this month that its 2020 budget would cap out at SAR 1020 billion ($272 billion) amid predictions that the kingdom will experience a $50 billion deficit amid falling oil production and crude prices, $15 billion more than in 2019.

However, the Saudi king said in a statement disproportionate to the deficit, saying that next year’s budget “will boost development in the country and continued economic growth and financial stability.” Saudi Arabia’s crown prince Mohammed bin Salman also said in a statement: “The 2020 budget amidst the challenges, risks and conservative policies facing the world economy requires flexibility in managing public assets.”

The highest budget has been allocated respectively in the education, military and health sectors. 19 percent of Saudi Arabia’s next year’s budget is worth $ 51.5 billion in education spending, and 16 percent in the health sector’s $ 44.5 billion.

Saudi King Salman bin Abdulaziz has emphasized that the government’s 2020 budget calls for “economic reform and diversification of sources of income, investment of Aramco’s revenues from the Public Investment Fund.”

But the truth is that oil prices have fallen sharply due to the fall in oil and gas prices globally, shale oil production by the USA and becoming this country the world’s largest oil producer, Saudi Arabia is seeking to sell Aramco shares to offset the deficit and to reinvest the proceeds of stock trading and help create more revenue channels for the government.

Saudi Arabia’s oil revenue is expected to decline to 513 billion riyals by 2020, while in 2019 it was estimated at 602 billion riyals. The government has not disclosed the figure projected for oil prices in the budget forecast, but it appears to be closed at $ 62-63 per barrel and production of 9.8 million barrels per day.

Saudi Arabia has suffered huge financial losses and military defeats over the course of its five-year-long war against Yemen invasion.

In fact, the war is proving too costly for Riyadh as some reports suggest that so far Saudis have spent up to $300 billion on the battle against the Houthi Ansarullah Movement without fulfilling any of its objectives.

That is why Riyadh plans to cut its military spending by 8% to 182 billion rials while trying to get out of the Yemen swamp.

Salman bin Abdulaziz, speaking at an extraordinary cabinet meeting chaired by the Riyadh Yamaha Palace, said that the 2020 budget is “a continuation of government policies to improve basic services and facilities for citizens and improve the quality of life and resettlement plans”. He has therefore ordered the extension of subsistence allowances.

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