Saudi hikes petrol prices by up to 50%

Riyadh - Subsidies are slashed, public service charges set to go up

Saudi Arabia announced a record budget deficit and cuts to fuel and utility subsidies on Monday as the oil powerhouse suffers from the drastic fall in crude prices.
Petrol prices in the kingdom are to rise by more than 50 per cent on some products from today, authorities said, after the world's largest crude exporter said it had posted a deficit of $98 billion in 2015.
The price of higher-grade unleaded petrol will rise to 0.90 riyals per litre from 0.60 riyals, a hike of 50 per cent, and for lower-grade petrol to 0.75 riyals from 0.45 riyals per litre, a 67 per cent rise.
National oil conglomerate Aramco said on Twitter it was immediately closing petrol stations until midnight on Monday, when it will resume sales at new prices.
Riyadh also projected a shortfall of $87 billion in next year's budget. The Finance Ministry said in a statement that revenues in 2015 were estimated at 608 billion riyals ($162 billion), the lowest since 2009 when oil prices dived as a result of the global financial crisis.
Income for 2015 was 15 per cent lower than projections and 42 per cent less than in 2014, after oil prices fell by more than 60 per cent since mid-2014 to below $40 a barrel.
Spending this year came in at $260 billion, the ministry said, almost equal to 2013 expenditures and down 6.6 per cent from 2014.
The 2015 deficit is the highest in the history of Saudi Arabia, which relies on oil for 90 per cent of public revenues, but was not as big as some expected.
The International Monetary Fund had projected the 2015 deficit to be around $130 billion and other reports also put it above $100 billion.
The 2016 budget projects revenues at $137 billion, the lowest since 2009, and spending at $224 billion, slightly below 2015 projections of $229 billion.
The statement noted that the budget "comes amid challenging international and regional economic and financial conditions", including "very low oil prices".
The Finance Ministry said it was planning a series of measures to contain spending, including a five-year programme to cut subsidies on electricity and fuel.
Authorities moved quickly after the budget figures were released, with the SPA news agency reporting the increase of petrol prices and saying the government would also cut subsidies for electricity, water, diesel and kerosene.
The finance ministry said it is also considering plans to raise charges on public services and to apply value-added tax in cooperation with other Gulf nations.
It unveiled economic and fiscal reforms to make the budget more sustainable, including a programme to contain spending growth, especially for wages and benefits which accounted for half of the 2015 budget.
A quarter of next year's spending, or $57 billion, has been allocated for defence and security expenditures, the ministry said. - AFP

• Saudi Arabia