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Sunday, 25 December 2016

Expat Fee, Subsidy Cuts: What’s in Saudi Arabia’s Fiscal Balance Plan? - Bloomberg

Expat Fee, Subsidy Cuts: What’s in Saudi Arabia’s Fiscal Balance Plan? - Bloomberg:
"Saudi Arabia followed a historic budget announcement last week with an 84-page document outlining how the Arab world’s largest economy plans to balance its budget by 2020. The document includes plans to curtail capital spending, raise new revenue and stimulate the private sector.

Following are highlights of what caught our attention:

Capital Expenditure:

Authorities reviewed projects with a total cost of 490 billion riyals ($131 billion) under the five civilian ministries with the highest capital spending. Of the total, 270 billion riyals had already been spent and the revision identified potential savings of 100 billion riyals.

An investor guide to the highlights of Saudi Arabia’s budget

The next phase will see the government examining capital spending at 13 entities with a total cost of about 1.18 trillion riyals. To control the costs of projects, the government is creating a strategic procurement unit.

Subsidy Reforms:

Additional subsidy cuts will involve a steady change in energy and water prices from 2017 to 2020. This is expected to help the kingdom save 209 billion riyals annually by 2020.

The government is looking to increase prices of local retail fuel by linking them to benchmark oil prices or to the average of gasoline and diesel fuel prices on the international market. Prices will change according to fluctuations in the international market and they will be revised periodically.

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