Saudi Arabia May Cut Subsidies on Oil and Water as an Economic Reform Amid Declining Oil Prices

Published By : 26 Nov 2015 | Published By : QYRESEARCH

The brunt of declining oil prices is also being felt by one of the richest oil producers of the globe – Saudi Arabia. In a recent update regarding the economical reforms being made by the country to balance the deficits brought by the constantly lowering oil prices, it has been said that the country may reduce subsidies on water and oil for country’s wealthy citizens among the other reforms.

The Deputy Crown Prince of Saudi Arabia, Mohammed bin Sulman was quoted as saying this on Wednesday in an interview with the New York Times. He said that the country needs to make reforms to diversify the economy away from oil under the current circumstances that feature a sustained decline in oil prices.

In the interview, it also appeared that he was suggesting a foreseeable decline in oil prices far below the current average of US$45 per barrel.

He was quoted as saying that even if the prices of oil fall to a level as low as US$30 per barrel, Riyadh, the Saudi currency, will be strong enough to keep building Saudi without having to exhaust its savings.

Saudi Arabia, being the top oil exporter of the world, is highly dependent on the global oil industry and its overall development. It was earlier said that the country was studying increase in domestic prices of energy, installation of solar and nuclear power, and the introduction of VAT on the economy.

The consistent low prices of oil in the current scenario and the projected deficits over the coming years have prompted the need for new reforms in the country with the aim of diversifying the economy and reduce the dependence on crude oil revenues.

Mohammed bin Sulman said that the key challenges that the country faces right now are its overdependence on oil and the way it prepares and spends its budgets.

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