NOURNEWS- Goldman Sachs predicts that declining oil revenues, along with rising Saudi spending, will increase the Saudi government's debt by $ 75 billion over the next three years. In addition, Saudi foreign exchange reserves are expected to fall to $ 330 billion by the first half of 2021, gradually increasing again, raising serious financial concerns for Saudi Arabia and causing Saudi Arabia to seek lower prices. The global oil crisis and the economic downturn caused by the outbreak of the corona virus have not only reduced supply and increased oil prices, but also tripled the VAT rate and suspended the payment of living allowances to government employees.
According to the Saudi government, the budget deficit in the first quarter of this year has reached $ 9 billion. In addition to lowering global oil prices, the budget deficit has been driven by declining non-oil revenues due to the suspension and reduction of economic activity and increased government spending on health care and financial support from various sectors of the economy.
Accordingly, the Saudi government has taken a number of key steps to reduce the pressure on the budget deficit.
Saudi Arabia will reduce its daily production by another 1 million barrels next month in order to increase oil prices. Under an agreement to reduce oil production from OPEC and allied countries, Saudi Arabia was required to cut its daily production by 2.5 million barrels per day in May and June, but with a new decision, Saudi Arabia's output fell by 3.5 percent in June. It will be a million barrels. Saudi Arabia is expected to reach 7.5 million barrels per day next month.
It has also suspended monthly payments of $ 267 in living allowances to each government employee and increased the VAT from 5 percent to 15 percent. (King Salman of Saudi Arabia ordered a monthly payment of $ 267 in living expenses to each government employee in 2018 following rising energy prices in the country.) According to official figures released in Saudi Arabia, about 1.5 million The Saudis are working in the public sector, and if these salaries are cut, nearly $ 5 billion will be returned to the Saudi treasury.
Unprecedented pressure from falling oil prices has forced a country like Saudi Arabia, which is heavily dependent on oil, to suffer heavy blows as a result of declining demand, which could lead to unrest in the country.
NOURNEWS