The government is reviewing thousands of projects valued at about 260 billion riyals ($69 billion) and may cancel a third of them, three people said, asking not to be identified as the discussions are private. The measures would impact the budget for several years and may include transport, housing and healthcare projects, according to two of the people. The government plans to carry out the review within six months, they said.
A separate plan includes merging some government ministries and eliminating others, two people said, also speaking on condition of anonymity, reports Bloomberg.
The International Monetary Fund expects the shortfall to drop to below 10 percent of GDP in 2017.
Short-term Strategy
“The revenue and economic diversification strategy being pursued will only start to yield results over the medium- to long-term,” Raza Agha, VTB Capital’s chief economist for the Middle East and Africa, said by e-mail. “In the short term, it is a question of living with lower oil prices by cutting some capital spending, and financing what’s left via debt sales and drawing down foreign reserves.”
The Finance Ministry declined to comment, while officials at the Ministry of Economy and Planning weren’t available for comment when contacted by Bloomberg.
Authorities set up the National Project Management Office last year to control capital spending and ensure that government projects are carried out efficiently. The office will oversee similar bodies, being created in ministries, municipalities and state entities to ensure infrastructure projects are executed on time and within budget.