$50 Oil Puts Saudi Budget Deficit Beyond Reach of Spending Cuts
- Analysts warn against using reserves to maintain spending
- Government yet to announce specific measures to cut costs
This article is for subscribers only.
The slump in oil prices has spurred Saudi Arabia’s government to search for savings, contemplate project delays and sell bonds for the first time since 2007. It won’t be enough to prevent the kingdom’s biggest deficit in decades.
“The revenue drop is so severe that it’s unrealistic to expect spending cuts to have any meaningful impact on the deficit in the near term,” said Simon Williams, HSBC’s chief economist for central and eastern Europe, the Middle East and North Africa. The longer oil prices stay weak, “the greater the pressure on the authorities,” he said in an e-mail.