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Saudi Arabia will increase costs in the budget-2017 increase in fuel prices

21/12/2016 13:28

Saudi Arabia in the budget for 2017, which is expected to be unveiled on Thursday, will increase costs to support economic growth and increase domestic fuel prices to relieve the burden of subsidies, the sources told Reuters.

The government is expected to announce a sharp reduction in the budget deficit this year to 297 billion riyals ($ 79.2 billion), said on Wednesday, sources familiar with the budget planning.

This will Riyadh to announce significant progress in the fight against large-scale deficit, formed as a result of falling oil prices. In 2015, the deficit amounted to a record 367 billion riyals, and in the initial budget for this year is projected figure of 326 billion.

The Ministry of Finance did not respond to a request for comment. Sources said that the figures given by them - is not final and can still be changed, but they do not expect significant adjustments.

Budget revenues in 2016 amounted to SAR 528 billion, slightly higher than originally projected 514 billion, while the expenses amounted to SAR 825 billion, slightly below the expected 840 billion.

The draft budget for 2017 envisages spending 890 billion riyals, 6 percent higher than the original forecast for 2016 expenditure. Revenues in the next year are expected to amount to 651 billion riyals compared to predict for 2016 514 billion.

The increase will allow the growth of the GDP of Saudi Arabia accelerated to 2.0 percent in 2017 from this year's expected 1.7 percent, the sources said.

Revenues in the next year can be supported by rising oil prices. After a global deal on reducing the production of oil producers, Brent is trading near the mark $ 56 per barrel compared to the average price of $ 45 per barrel since the beginning of this year.

Indicators of expenditures and revenues in 2017 indicate that Saudi Arabia's budget deficit will fall to 239 billion riyals. The authorities have previously said that they intend to eliminate the deficit by 2020.

The budget for 2016 domestic fuel prices, including gasoline, have been increased to ease the burden on the state budget from the subsidies paid. In the budget for 2017 in energy prices will be increased even more, the sources said.

They did not specify the size of the increase and fuel, which it touches. However, sources said that in future domestic and world prices would link formula, which they also did not disclose.

Neighboring Saudi Arabia, the state - the United Arab Emirates already strapped domestic fuel prices to international. Nevertheless, gasoline in the UAE is still much cheaper than in most countries.

budget-2017 project also includes a new program of financial aid to the Saudis in low- and middle-income countries, which have suffered due to the austerity policy, the source said, without disclosing details.