Fitch Ratings says the budget deficit of Saudi Arabia will remain high until at least 2018 in what could be a fresh indication that the economic troubles of the world’s biggest crude oil exporter will still continue to suffer from the impacts of low crude prices.
The ratings agency said the budget deficit of Saudi Arabia is likely to be 11.2 percent and 6.8 percent of GDP respectively this year and next. It is expected to fall to 2.4 percent in 2018.
The improvement of the deficit will primarily be the result of rising oil prices, but the government's National Transformation Programme (NTP), presented in June, will also have an important impact, the agency said as it affirmed Saudi Arabia's long-term foreign and local currency issuer default ratings (IDRs) at 'AA-' with negative outlooks.
Fitch said during the first seven months of 2016, overall government deposits at the Saudi Arabian Monetary Agency (SAMA) declined by SR92 billion to SR1,070 billion or around 46 percent of GDP, Arabianbusiness.com reported.
It added that general government debt is likely to rise to 14.7 percent of GDP by end-2016, from just 1.6 percent in 2014 but still well below the 'AA-' category median of 38.7 percent.
The International Monetary Fund (IMF) said in April that the Saudi economy would only grow by 1.2 percent in 2016, the lowest in seven years, and by 1.9 percent next year.
Saudi Arabia last December posted a record high budget deficit of $98 billion for 2015 in what was seen as the result of plummeting oil prices on kingdom’s revenues.
The kingdom’s revenues for 2015 were estimated at SR608 billion ($162 billion), which was far below earlier projections and income figure for 2014, while spending figure was announced at SR975 billion ($260 billion).