Saudi Arabia’s fiscal reserves dropped to a four-year low last year as the kingdom was struggling to make up for an acute budget deficit caused by plunging oil revenues.
According to a report released on Tuesday, fiscal reserves of the world’s largest crude exporter fell to USD 611.9 billion at the end of 2015, which was the lowest figure recorded for the country since 2011, AFP reported.
The figure was down from USD 732 billion recorded a year before, Saudi Arabia’s Jadwa Investment said in an economic report.
Jadwa added that it expects the country’s fiscal reserves to decrease to about USD 500 billion by the end of 2016, as global oil prices have been falling by three quarters since mid-2014.
Saudi Arabia, which is the second largest crude producer in the world after Russia, posted a record high budget deficit of USD 98 billion in 2015 as plummeting oil prices took their toll on the kingdom’s revenues.
According to officials, the kingdom’s revenues for the year were estimated at 608 billion riyals (USD 162 billion), which was far below earlier projections and income figure for 2014, while spending figure was announced at 975 billion riyals (USD 260 billion).
The budget deficit was the highest in the history of Saudi Arabia with 2015 being the second year in a row that Saudi Arabia experienced a budget deficit.
Riyadh has also projected a budget deficit of USD 87 billion for this year, but Jadwa forecast the shortfall to be more than USD 107 billion.
Budgetary pressure has forced Saudi Arabia to review the prices of heavily-subsidized electricity and fuel in the country in what has been seen as part of Riyadh’s new measures to cope with low oil prices.
According to Saudi Finance Ministry, plans have been put in gear to increase charges on public services and apply value-added tax (VAT) in cooperation with other Persian Gulf Arab nations.
Last December, Saudi Arabia’s official Saudi Press Agency reported that Riyadh had decided to raise gasoline prices by more than 50 percent for some products.
Prices have been also increased for electricity, water, diesel and kerosene under the cuts approved by the council of ministers, which is headed by Saudi Arabia’s King Salman.
Saudi Arabia posted a budget deficit of USD 17.5 billion in 2014 with Jadwa Investment firm announcing that by the end of July the government had withdrawn USD 82 billion of its fiscal reserves, reducing the assets to USD 650 billion.
Saudi Arabia has been widely blamed for the plummeting oil prices as Riyadh has adamantly refused to cut its crude output in a bid to drive other oil market players, including US shale producers, out of the market.