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Saudi Arabia announces record budget for 2018

Saudi Arabia is set to raise government spending and ease an austerity drive in 2018 as it struggles to boost a flagging economy crimped by low oil prices, Reuters reported Dec. 20.

King Salman's government will increase government spending to a record 978 billion riyals in 2018, up from 890 billion riyals in the original 2017 budget and actual spending of 926 billion riyals in the year. The bulk of the increased spending will be for infrastructure projects.

The 2018 budget deficit is expected to ease at 195 billion riyals, or 7.3% of GDP, against an actual 230 billion riyals in 2017, the report said.

King Salman also reset the target date for eliminating the deficit to 2023 from 2020.

The 2018 budget plan predicts the economy will grow 2.7% in 2018 after contracting 0.5% in 2017.

Meanwhile, Finance Minister Mohammed al-Jadaan said that with the modest decline in the 2018 budget deficit, the drawdown of the Saudi Arabian central bank's net foreign assets is likely to slow in 2018 and in the years ahead, another Reuters report said Dec. 20.

The Saudi Arabian Monetary Authority's net foreign assets have dropped to $485.9 billion in October 2017 from $737 billion in August 2014 as the government liquidates assets to cover a budget deficit.

On the planned sale of a stake in state oil giant Saudi Aramco next year, Jadaan said a listing of the shares in Riyadh is "definitely an option," but other options, including an additional international listing, were still being reviewed.

"It's premature to go into specific details on how the IPO is going to be structured," he said.

As of Dec. 18, US$1 was equivalent to 3.75 Saudi riyal.