RIYADH: Saudi Arabia’s fiscal reserves dropped to a four-year low last year as the government sought to finance a budget deficit caused by plunging oil revenues, a report said on Tuesday.
The reserves of the world’s largest crude exporter dropped to $611.9 billion at the end of 2015, the lowest level since 2011, down from $732bn a year before, the Saudi Jadwa Investment said in an economic report.
Jadwa said it expected reserves to fall to around $500bn by the end of 2016, after oil prices fell by three quarters since mid-2014.
The kingdom, the second largest crude producer after Russia, posted a record budget deficit of $98bn last year after oil income dived by 60 per cent to just $118bn.
Riyadh also projected an $87bn deficit for this year but Jadwa forecast the shortfall to be more than $107bn.
To help finance the budget deficit, the kingdom in December introduced a series of austerity measures raising fuel prices by up to 80pc and increasing the prices of electricity, water, natural gas and others.
Jadwa said it expected inflation to soar this year to 3.9pc, from 2.2pc last year, as a result of the price hikes.
The kingdom also issued bonds in the domestic market worth $30bn.
The IMF last month revised downward Saudi gross domestic product growth to just 1.2pc this year, the lowest since 2009.
Its GDP grew 3.4pc in 2015.
Saudi Arabia is currently pumping 10.2 million barrels of crude per day.