Saudi Arabia Cuts Spending, Raises Domestic Fuel Prices

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Source Wallstreet Journal

Saudi Arabia Cuts Spending, Raises Domestic Fuel Prices
Cheap oil forces kingdom to run record budget deficit
The Khurais oil field, about 100 miles from Riyadh. Oil prices have fallen by more than 50% since the middle of last year, crimping the government’s spending. ENLARGE
The Khurais oil field, about 100 miles from Riyadh. Oil prices have fallen by more than 50% since the middle of last year, crimping the government’s spending. PHOTO: REUTERS
By AHMED AL OMRAN And SUMMER SAID
Updated Dec. 28, 2015 9:33 p.m. ET
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RIYADH—Saudi Arabia on Monday unveiled plans to cut expenditures and sharply raised domestic fuel prices as the world’s top oil exporter attempts to cope with a new era of cheap crude prices.

After years of spending its massive oil wealth to bolster the local economy and provide subsidized energy and other utilities to its 30 million people, a steep decline in oil prices has forced the kingdom to reassess these plans.

On Monday, officials said the government ran a record deficit of nearly 367 billion Saudi riyals ($98 billion) this year, or about 15% of gross domestic product, as low oil prices suppressed revenue, pushing it to cut planned spending by 14% in 2016 amid expectations that income from oil sales will remain under pressure.