Saudi royal priorities
A recent budget report shows challenges ahead for the Saudi economy in 2015.
The Saudi budget announced late this December keeps domestic and foreign spending high even as oil revenues plummet, a reflection of the royal family's concern about internal unrest four years after the Arab Spring. Hard choices are deferred for now.
The Saudi budget projects spending for next year at $229 billion and revenues at $190 billion, according to the Saudi Gazette. The estimated deficit will be $38.6 billion. Spending actually will rise slightly over last year while revenue has fallen due to lower oil prices. The deficit will be the largest in the kingdom's history.
Finance Minister Ibrahim Al Assaf has said the deficit will be funded by drawing down the kingdom's reserves, estimated at $750 billion or more. King Abdullah bin Abdulaziz has already authorized drawing on reserves to keep spending high. The king has also promised to keep pumping around 9.6 million barrels per day.
During previous periods of falling oil prices the kingdom has cut spending. In 1998, for example, Abdullah said Saudis had to change their lifestyle to recognize that "the time of abundance is over." In 2009, the Saudis cut back on government jobs and public projects. In the worst crisis in the 1980s per capita income fell by roughly 50%.
