Budget 2016 to focus on new sources of revenues

The government is expected to announce a drive to raise revenue from new sources as it lays out a strategy for the new year to cope with an era of cheap oil, according to economists.

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The state budget for 2016 is expected to be released this week, sources have said.
Fahad Alturki, chief economist and head of research at Jadwa Investment, told Arab News: “We expect budget 2016 to confirm again the government’s determination and ability to support economic activity despite the prevailing subdued oil pricing environment.”
He said: “It will most likely highlight the strong focus on economic diversification as spending on physical and social infrastructure is likely to be kept at elevated levels.”
Markets are jittery because low crude prices have pushed state finances into deficit.
The Saudi Stock Exchange has fallen 16.3 percent so far this year.
The Tadawul All-Share Index ended 1.63 percent lower on Sunday at 6,931.08 points.
The government’s deficit this year is expected to come in at about SR400 to SR500 billion, around 20 percent of gross domestic product, Reuters has quoted economists as saying.
“Authorities are contemplating additional revenue-raising measures. These could include — either singularly or in combination — cuts to subsidies, the imposition of corporate taxes, the introduction of VAT (possibly taken under the cover of a GCC wide initiative) along with punitive taxes on certain products, and privatization,” stated the Samba Economic Monitor released this month.
“We await the release of the 2016 budget to see if it provides specific measures, possibly encased in a medium term fiscal framework, something that the IMF has long been urging,” the report added.