Saudi Arabia posts $98 billion deficit, raises petrol prices

The reality check has seen the domestic oil price rise from 0.60 riyal to 0.98 riyal a litre (36¢), which is still around a quarter the price paid at the bowser by most Australian motorists.

The dive is largely due to Saudi Arabia's own policies and those of other OPEC nations, who are refusing to cut oil production as they seek to drive less-competitive players, including USA shale producers, out of the market.

Prices also were increased for gas, diesel, kerosene and other utilities, such as water and electricity, a Saudi official said, calling the fuel increases "significant" as the kingdom copes with cheap oil.

The kingdom's 2016 budget is probably based on crude prices of about US$29 a barrel, according to Riyadh-based Jadwa Investment Co. The Brent oil price averaged about $US54 ($A74) a barrel this year but is now around $US37.

The kingdom announced projected revenues for the coming fiscal year of $137 billion (513 billion riyals), around $26 billion (95 billion riyals) less than the total for 2015.

Riyadh also projected a shortfall of 87 billion in next year's budget, the first since King Salman took over the country in January.

Private analysts said markets could react positively to Monday's budget announcement because the 2015 deficit was lower than the 400-450 billion riyals which many investors had feared.

"Our economy has all that it needs to face the current economic challenges, the priority will be for the completion of projects in previous budgets", he said. Saudi Arabia normally overspends its budget projections by around 20 percent.

The Saudi government has been digging into its large foreign reserves, built up during years of higher oil prices.

"If we look at the actual spending in 2016, it is very similar to the budget of 2015", Hashem said.

The finance ministry said it was planning a series of measures to contain spending, including a five-year programme to cut subsidies on electricity and fuel. Lower-grade petrol will hike to 0.75 riyals from 0.45 riyals per litre, up two-thirds.

A Saudi man walks past a pump at a petrol station Monday in the Red Sea city of Jeddah.

It will implement spending cuts, reforms to energy subsidies, taxes and privatisation to try and reduce the deficit in 2016, the finance ministry said.

Saudi Arabia reduced energy subsidies and allocated the biggest part of government spending next year to defense and security. It was unclear how much the intervention in Yemen was costing as Saudi Arabia has not previously released figures on defence spending.

Assets dropped 14.2 percent from a year earlier to their lowest level since October 2012, central bank data showed on Monday.

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