Saudi Arabia to 'take stock' of spending priorities after oil revenue drop, FT reports
May 29 (Reuters) - Saudi Arabia's Finance Minister Mohammed Al-Jadaan said the kingdom would "take stock" of its spending priorities in response to a significant decline in oil revenue, the Financial Times reported on Thursday.
Riyadh plans to maintain its current pace of government spending despite facing widening budget and current account deficits, as well as rising debt levels, the FT said, citing an interview with the minister.
Jadaan told the newspaper that he would not be concerned about the deficit widening to 3%, 4%, or "occasionally" 5% of GDP as long as government spending supported non-oil growth — a key target under the kingdom's diversification strategy.
Jadaan said Saudi Arabia aimed to avoid the "trap of booms and busts" by pursuing countercyclical policies and prioritising growth over short-term fiscal balance, the report added.
Saudi Arabia has been ramping up oil refining operations to capitalise on strong margins, helping offset revenue lost to weaker crude prices and exports.
While crude prices are likely to remain at current levels or even lower for most of the year given the surge in supplies and demand uncertainty, the increased refining operations offer Riyadh an effective tool to manage oil price volatility and to better withstand a protracted price war.
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