Saudi Arabia, which has forecast a budget deficit of around 200bn riyals (SAR) – or US$53bn – for 2017, is reported to be ready to cut billions of dollars from projects as part of its aim to balance the books by 2020.
The Middle East kingdom, the world’s second-largest oil producer, has been hit hard by the sharp fall in oil prices from mid-2014 levels. From a high of more than US$100 a barrel, the price of oil steadily declined to a low of US$29 a year ago.
While the past 12 months has seen a semi-recovery to around US$55 a barrel, Saudi Arabia still aims to lessen its dependence on oil by strengthening revenues from non-oil industries to 50% of the total and also by restricting spending.
The projected budget deficit for this year is down from a record SAR367bn in 2015 and SAR297bn last year. The government had originally projected a SAR326bn deficit for 2016.
According to a Financial Times report, Saudi Arabia is assisting progress towards a balanced budget by the end of the decade by awarding a contract to consultancy group PwC to identify potential savings of SAR50bn to SAR75bn from cuts to various projects.
According to the FT, the reductions will be largely target capital expenditure, such as infrastructure projects, as Riyadh hopes to avoid any politically sensitive spending cuts following an outburst of public discontent last year in response to austerity measures.
The government has already halted or restructured hundreds of projects across the kingdom in 2015 and 2016. It has also delayed payments to companies, exacerbating the problems in the private sector and reducing non-oil growth to less than 1% last year. The finance ministry has pledged to finalise SR105bn in late payments by next month.
“PwC will be doing big number crunching, lots of accountancy work trying to understand the liabilities the ministries already have, who is doing what, and where the cuts can most easily be made,” an unnamed executive told the FT.
ExxonMobil is legally challenging a $2m fine from the US Treasury for allegedly violating sanctions against Russia in 2014 while US Secretary of State Rex Tillerson was still overseeing the company.
Morgan Stanley is moving staff to Frankfurt in time for the March 2019 Brexit deadline.
The US bank, which already has 350 employees based in the city, will transfer some trading activities currently undertaken in London and create a further 150 to 250 jobs according to reports.
Despite the country’s latest financial bailout, the outlook for Greek corporates over the next year is no better than mixed according to trade credit insurer Atradius.