Saudi Finance Minister Ibrahim al-Assaf ruled out Sunday any foreign borrowing as the world's leading oil producer and exporter announced a US$12 billion budget deficit for next year, the largest since 1998.
"Saudi financial establishments and national reserves are capable of meeting the shortfall. We will not resort to foreign borrowing to meet the deficit. The position of our banks is excellent," Assaf said.
Revenues were projected at 157 billion riyals (US$41.9 billion) and expenditures at 202 billion riyals (US$53.9 billion).
The deficit is the largest since the kingdom boasted a US$13 billion shortfall in 1998 when average price for Saudi oil was just over US$12 a barrel and output was 8.3 million barrels per day.
The sharp drop in revenues from a projected 215 billion riyals (US$57.3 billion) for this year follows a major decline in oil prices after the Sept.11 terror attacks in the US and cuts in production.
Saudi crude output stands at 7.541 million barrels per day and its oil price is about US$2 less than the Brent crude which closed Friday at US$18.10 a barrel. Production is expected to be slashed to around seven million bpd in January.
The kingdom does not disclose the breakdown of revenues, but local economic reports had forecast non-oil revenues at around 40 billion riyals (US$10.7 billion) leaving the remaining 31.2 billion dollars for oil.
Assaf estimated that Saudi internal debt at the end of this year topped 630 billion riyals (US$168 billion), just under the kingdom's GDP of 668 billion riyals (US$178 billion).
The debt, obtained from local Saudi banks and financial institutions, is tipped to rise next year as the deficit increases.
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