The government ran a deficit of 367 billion riyals ($97.9 billion) in 2015, or 15 percent of gross domestic product, officials said. The 2016 budget plan aims to cut that to 326 billion riyals, reducing pressure on Riyadh to pay its bills by liquidating assets held abroad.
Next year’s budget projects spending of 840 billion riyals, down from 975 billion riyals actually spent this year. The finance ministry said it would review government projects to make them more efficient and ensure they were necessary and affordable.
Revenues next year are forecast at 514 billion riyals, down from 608 billion riyals in 2015. The Brent oil price averaged about $54 a barrel this year but is now about $37.
The success or failure of the budget plan will be key to maintaining the confidence of financial markets in Riyadh.
As the deficit has swelled, the riyal has dropped in the forwards market to its lowest since 1999 because of fears that Riyadh may eventually have to abandon its peg to the U.S. dollar.
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