Saudi Arabia identifies SAR 17 bln of cost cuts in projects review

Saudi Arabia has identified up to SAR 17 billion ($4.53 billion) in further efficiency savings from reviewing state projects, Reuters reported on Thursday, citing finance minister, Mohammed Al Jadaan.

The kingdom has ordered ministries and agencies to review billions of dollars’ worth of unfinished infrastructure and economic development projects with a view to shelve or restructure them.

“They just were making sure that they [the projects] are done in the most efficient manner. They are about to conclude their work and they have identified about SAR 15 billion or SAR 17 billion of savings so far,” Jadaan said, with no further details on the nature of the savings.

Earlier this week, the Bureau of Capital and Operational Spending Rationalization was said to be compiling a list of projects that are under 25 percent complete amid the government plans to review multibillion-dollar projects to shelve or restructure them.

Last February, the government office announced saving SAR 80 billion ($21 billion) in 2016.

Meanwhile, Al-Jadaan expected the planned 5 percent value-added tax (VAT) to bolster the kingdom’s revenue.  

Saudi Arabia is “ready and willing to implement” the tax on schedule on January 1, 2018, and it could happen without other Gulf countries, he added.

The kingdom’s budget deficit is projected to hit SAR 198 billion, or 7.7 percent of gross domestic product (GDP) this year, compared to SAR 297 billion in 2016 and the record SAR 367 billion, or 15 percent of GDP in 2015.