Saudi shares tumble over record deficit
A surprise announcement by Saudi Arabia that it faces a record deficit of $98 billion sent share prices in Riyadh tumbling on Tuesday.
The Tadawul All-Shares Index (TASI) fell by 3.1 percent minutes after opening but recovered slightly to close down 0.9 percent at 6,930.60 points.
The market losses were led by the key petrochemical sector, which had shed 3.8 percent at the close, AFP reported.
Saudi Arabia’s Finance Ministry announced the record deficit – which is believed to have been created as a result of plunging oil prices – on Monday.
According to officials, the kingdom’s revenues for 2015 were estimated at 608 billion riyals ($162 billion), which was far below earlier projections and income figure for 2014, while spending figure was announced at 975 billion riyals ($260 billion).
The budget deficit has been the highest in the history of Saudi Arabia, which is currently the world's largest oil exporter, but fell short of earlier projections.
This is the second year in a row that Saudi Arabia experiences a budget deficit.
The government has now announced a series of measures to counter the effects of 2015 budget deficit. They include unprecedented cuts to public subsidies on fuel, power and water. The price of gasoline, for example, will be increased with an immediate effect by above 50 percent.
TASI and other Persian Gulf bourses have witnessed sharp volatility throughout 2015 mainly due to the slump in oil prices that led to spending cuts by regional governments and hit corporate profits.
In Monday trading across the region, Dubai rose 0.5 percent, Abu Dhabi was up 1.0 percent, while Qatar closed unchanged. Kuwait dropped 0.8 percent, Oman fell 0.2 percent and Bahrain 0.16 percent.
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