Saudi Arabia announces massive subsidy cuts after falling oil prices lead to record deficit

30-Dec-15

Saudi Arabian authorities announced massive subsidy cuts after falling oil prices for 18 months caused a record deficit, announcing prices would rise on fuel, electricity, water, plane tickets and cigarettes. A 2015 budget deficit of US$98 billion was announced aerlier in the week. Prices on fuel products were raised by up to 80%, including a 50% hike in petrol prices. With oil prices expected to remain low, Saudi authorities also projected a shortfall of US$87 billion in the 2016 budget. Revenues in 2015 dropped to US$162 bln, the lowest since the global financial crisis in 2009, due to a massive US$123 bln fall in oil revenues. The contribution of oil income to revenues dropped to 73% in 2015, from an average of 90% in the past decade.