Saudi Arabia is still going through because of the oil prices. But it will not last long.
Kingdom said that it has already made the first good results in terms of overcoming their dependence on oil and politicians are convinced that they will not have to worry, if in 2020 the price will drop to $ 40 per barrel.
"In fact, we do not really care if the price at that time will be $ 40, $ 45, $ 50 or $ 55, because we have taken significant steps in order to be independent of oil prices", - the Minister of Finance of Saudi Arabia said, Mohammed Al-Dzhadaan in an interview with CNNMoney's Emerging Markets.
"We plan to totally overcome this dependence, we live in the last 40-50 years. I hope that by 2030 we will not have to worry, when suddenly the price of oil will be zero, "- he said in an interview.
Last year, Saudi Arabia has presented an ambitious plan aimed at getting the economy from dependence on oil after prices fell to $ 26 a barrel, triggering a huge "hole" in the budget.
Since Saudi Arabia has stabilized its economy. It reduced government subsidies, has announced new taxes and increased the volume of loans to balance its budget. Politicians have also reduced salaries for senior ministers and civil servants. This policy was canceled six months later, when the objectives have been achieved.
"This was done at a time when we are really worried about the oil price, worrying about other economic risks", - said Mr. Al-Dzhadaan.
This is interesting: OPEC "no longer controls" oil prices
International Monetary Fund said on Wednesday that the Kingdom may soften the austerity measures "to reduce the impact on growth in the short term."
Support the economy also helped by the higher oil prices, which are now fluctuating around $ 50. OPEC, led by Saudi Arabia and Russia have reduced production volumes in the first half of 2017, to reduce the oversupply. They can extend the deal by March 2018.
But the United States continues to increase production, while retaining the possibility of price control. Over the past year the number of active rigs has doubled.
UBS analysts believe that now the US producers can make a profit as long as the prices are above $ 40 per barrel. In 2014 was a necessary price of $ 65 for profit.
Saudi Arabia expects the budget deficit in 2017 will amount to 7.7% of GDP compared with 11.5% last year.
The IMF predicts that the kingdom would require oil prices to $ 84 a barrel for a balanced budget in 2017. The following year, the break-even budget price falls to $ 74.
Based on materials WELTRADE
