Saudi Arabia to slash spending by 5% as oil prices fall


A man walks past a banner showing Saudi King Salman, right, and his Crown Prince Mohammed bin Salman, outside a mall in Jiddah, Saudi Arabia, Saturday, March 7, 2020. (AP Photo/Amr Nabil)

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

DUBAI, United Arab Emirates (AP) — Saudi Arabia said the government will cut spending by 5%, or about $13.3 billion, to offset the impact of plunging oil prices and the effects of the new coronavirus on its economic outlook and deficit.

In a statement carried by the state-run Saudi Press Agency late Wednesday, Finance Minister Mohammad Al-Jadaan said additional measures would be taken to deal with the drop in oil prices, but he did not elaborate further.

Saudi Arabia has around $500 billion in foreign reserves, but with oil prices plummeting to around $26 a barrel and tourism revenue drying up due to a suspension of the Muslim pilgrimage to Mecca, it was expected the kingdom would make cuts to its spending. Oil prices plunged as Saudis moved to flood the market and dominate sales amid a slowdown in demand for oil worldwide.

Saudi Crown Prince Mohammed bin Salman has been racing to diversify the economy away from reliance on oil for revenue. Despite broad efforts at transforming the economy, the country continues to rely on higher oil prices of around $80 a barrel to balance its budget.

Al-Jaadan said the government approved a partial reduction in spending in areas “with the least social and economic impact.” He did not give specific details on where the spending cuts would happen.

The kingdom, which leads one of the world’s 20 biggest economies, relies heavily on government spending to fuel its economy and pay the salaries of most Saudi citizens who work in the public sector.

Saudi Arabia has already announced a roughly $13 billion stimulus package to support the private sector and extend financing to small and medium-sized businesses impacted by the virus, which has affected countries around the world.

The kingdom has halted all commercial flights and closed its borders to travelers to slow down the spread of the virus, which has infected nearly 240 people in the country. The government also ordered most public and private sector employees to work from home for two weeks, and closed schools, universities, restaurants, malls, entertainment venues and even mosques, while keeping food delivery, grocery stores and pharmacies operating.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

CBS47 On Your Side

Do you have a problem that you need help solving? Contact CBS47 and let us be On Your Side.

Phone: 559-761-0383

Images from Armenia

Small patients in Armenia
Yerevan by night.
Dr. Jeff Thomas delivers.
Dr. Jeff Thomas delivers in Gyumri.
Doctors unpack medical supplies from The Central Valley.
Fresno Medical Mission at work.
Medical Supplies being unloaded.
Fresno Medical Mission at the ready.
KSEE24 crew witnesses the miracle of life in Gyumri, Armenia.
Life saving work of Central Valley surgeons in Armenia.
Ribbon cutting on new surgical center in Ashtarak Armenia. Fresno donors made this dream come true.
KSEE24 on assignment with the Fresno Medical Mission
Honorary Consulate to Armenia Berj Apkarian explains the crisis facing one hospital.
KSEE24's Stefani Booroojian and Kevin Mahan at the meeting with President Bako Sahakyan.
Medical Meeting in Artsakh.
The President of Artsakh meets with the Fresno Medical Mission.
Learning modern medicine techniques with the Fresno Medical Mission in surgery.
Leaning in for a look. Dr. Brien Tonkinson holds class and helps a patient in Armenia.
Fresno Medical Mission cares on one of the smallest patients in the region. Six-year old Yanna receives life-changing better breathing surgery.