STOCK MARKET WATCH -- Wednesday, 26 August 2015

[Demeter]

17. Saudi Arabia Is Seeking Advice on Cutting Billions From Its Budget in the Wake of the Oil Crash

I HAVE SOME SUGGESTIONS!

1. DECLARE PEACE IN YEMEN AND GET OUT
2. STOP FUNDING TERRORISM AND OVERTHROW OF GOVERNMENTS
3. PUT THE HOUSE OF SAUD ON A BUDGET

http://www.bloomberg.com/news/articles/2015-08-25/saudi-arabia-said-to-seek-advice-on-budget-cuts-after-oil-s-rout-idrana9e

Saudi Arabia is seeking advice on how to cut billions of dollars from next year’s budget because of the slump in crude prices, according to two people familiar with the matter.

The government is working with advisers on a review of capital spending plans and may delay or shrink some infrastructure projects to save money, the people said, asking not to be identified as the information is private. The government is in the early stages of the review and could look at cutting investment spending, estimated to be about 382 billion riyals ($102 billion) this year, by about 10 percent or more, the people said. Current spending on areas such as public sector salaries wouldn’t be affected, the people said.

The Arab world’s largest economy is expected to post a budget deficit of almost 20 percent of gross domestic product this year, according to the International Monetary Fund. With income from oil accounting for about 90 percent of revenue, a more than 50 percent drop in prices in the past 12 months has put pressure on the nation’s finances. The country has raised at least 35 billion riyals from local bond markets this year, the first time it has issued securities with a maturity of over 12 months since 2007.

“This is a response to the lower oil prices but also to the fact that capital spending has been growing strongly over the past few years,” Fahad Alturki, chief economist and head of research at Jadwa Investment Co., said by phone from Riyadh Tuesday. “Although a cut in capital spending will impact economic growth, the non-oil sector is not as reliant on government spending as it was 20 or 30 years ago.”

MORE