Saudi’s fiscal position affected on falling oil prices

09 Dec 2014

(MENAFN) Despite Saudi Arabia’s fiscal position being expected to be impacted by the lower oil prices, as oil prices continue with their decline, reaching their five-year low, the government has maintained that it will keep with its elevated fiscal expenditures, Arab News reported.

Saudi maintained that despite declining oil prices impacting its revenues since oil makes up 90 percent of it, the country has substantial fiscal buffers to withstand lower oil prices, thus the government said that these prices will not affect the financing of its mega projects, which have been listed in the previous budgets.

Saudi Arabia, which built its budget around a forecasted oil price of USD65 for the barrel, maintained that the current fall in oil prices would assist global economic recovery as the market recovers from oversupplying as well as push out the US shale gas exports, which the country has maintained is their biggest threat since it jeopardizes the market share of OPEC as the most important supplier of oil in the international oil market.

“Oil prices have been exaggerated on the downside and they have been under pressure but there are enough catalysts in 2015 that will help stabilize prices at a higher level from where they are now. Emerging markets will enter a higher growth phase next year and that will help fuel greater demand.” The Saudi Oil Minister was quoted saying.