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Saudi economy can withstand oil downhill slope: report

The kingdom’s oil output is projected to expand by 3.3 per cent by the end of 2015

The Saudi economy can withstand ramifications arising from the steep decline of oil prices, as the kingdom remains committed to a hefty public spending scheme in 2016.

The world’s largest oil exporter remains in a strong fiscal situation, thanks to abundant reserves that act as a buffer against external shocks.

According to a report released by the National Bank of Kuwait, Saudi government debt was relatively low at 1.6 per cent of gross domestic product ($11.6 billion) in 2014.

The kingdom can grapple with the plunge in oil prices in international markets through government-guaranteed bonds and withdrawing from its reserves.

The report indicates that the Arab Gulf country will continue to do so for at least two years; the time at which foreign reserves would have been slashed by almost half.

The report assures that the kingdom can easily address the decline in revenues at least in the medium term but it needs to maintain its fiscal policy in the future.

Saudi Arabia’s oil output is projected to expand by 3.3 per cent by the end of the current year following all-time highs recorded last year, when production crossed the 10-million-barrels-a-day barrier, the report published by the Kuwait News Agency (KUNA) shows.

($1 = AED3.67, at the time of publishing)