Saudi Arabia’s economy minister denies the new budget is ‘radical austerity’

This week, Saudi Arabia announced that during 2015 it had seen a $98 billion deficit. Worse still, next year might not be much better, with a shortfall projected at $87 billion in the official budget. In a bid to raise revenues, oil prices were unexpectedly raised by 50 percent on Tuesday – jumping to the still remarkably cheap 0.90 riyals (24 cents) a liter, less than a dollar per gallon. Analysts expect further cuts to public spending, most notably in the form of privatizations and restrictions on the country’s generous subsidies programs.The news seemed to be proof that a long period of low oil prices were causing trouble in the Persian Gulf kingdom, which had long been economically buttressed by its enormous oil reserves. As the Financial Times put it, Saudi Arabia’s new budget seemed to be “radical austerity.” However, in a phone interview on Wednesday, Saudi Minister of Planning and the Economy Adel Fakeih hit back at that label, and suggested the drop in spending was less significant than observers believed.