In a bid to shore up the Middle East nation’s finances battered by the global slump in crude prices, Saudi King Salman has pledged to diversify the country’s economy and veer off its heavy dependence on oil.
King Salman said on Wednesday that Saudi Arabia “is keen to implement programs to diversify income resources and reduce reliance on oil as the main source of income.”
“I have directed the Council of Economic and Development Affairs to devise the necessary plans, policies and programs to achieve that,” he said while addressing the Shura Council, a formal advisory body.
Saudi Arabia – the world’s largest crude exporter – relies heavily on oil income, which accounts for over 90 percent of public revenues in the country.
But the plunge in the price of the commodity by over 60 percent since mid-2014 due to a global supply glut has deteriorated the nation’s public finances.
The International Monetary Fund (IMF) projects Saudi Arabia to post a record budget deficit of around $130 billion for this year.
The IMF has advised Riyadh to implement reforms, including expanding non-oil revenues, warning that failure to do so would deplete its foreign reserves, which fell to $644 billion at the end of October from around $732 billion at the end of last year.
In 2014, Saudi Arabia posted a budget deficit of $17.5 billion, only its second since 2002.
Salman, who ascended to the throne earlier this year, said Saudi Arabia carried out a large number of mega infrastructure projects and boosted its fiscal reserves in the past several years when oil prices were high.
The size of the fiscal buffers has enabled the kingdom to overcome the consequences from the sharp decline in oil revenues, said the king, adding that development projects have not been affected by the drop.