Riyadh (AFP)

Saudi Arabia, hit hard by the health crisis and falling crude prices, on Tuesday announced a budget deficit of $ 79 billion (65 billion euros) for the year 2020, which represents a little more than double the previous deficit.

"The budget deficit is forecast to increase to around 298 billion rials by the end of 2020, and we plan to reduce it by the end of 2021 to 141 billion rials (31 billion euros)," the ministry said. Finances in a press release.

The country plans to spend 990 billion rials (217 billion euros) in 2021, down sharply from this year, the statement said.

In December 2019, the Saudi kingdom had forecast an increasing budget deficit, but to the tune of 50 billion dollars (more than 40 billion euros), against the backdrop of already falling oil production and prices.

The largest economy in the Arab world and the world's largest exporter of crude, this wealthy Gulf monarchy announced in May an austerity plan providing for a tripling of the value-added tax and the end of monthly allowances to its citizens, in response the historic fall in the price and demand of oil and the Covid-19 pandemic.

At the same time, the kingdom said it planned to borrow nearly $ 60 billion over the year to finance its budget deficit.

The deficit in 2019 reached around $ 35 billion.

Riyadh has borrowed more than $ 100 billion in recent years and has drawn on its reserves to cover these deficits.

In October, the International Monetary Fund (IMF) estimated that Saudi Arabia's economy would contract by 5.4% in 2020.

- "Difficult year" -

"This year has been difficult on a global scale and exceptional measures and initiatives have had to be taken," said King Salman of Saudi Arabia.

He stressed that the budget for the year 2021 would give "priority to the protection of the health of citizens and residents and their safety. Efforts will continue to curb the effects of this pandemic".

Due to the pandemic, the Saudi authorities have reduced the number of participants in the hajj, the great pilgrimage to Mecca, which took place this year between late July and early August.

Only tens of thousands of faithful residing in Saudi Arabia were able to perform it, against some 2.5 million participants from around the world in 2019. And this deprived Saudi Arabia of significant income, while Riyadh hoped to be able to welcome 30 million pilgrims every year by 2030.

Saudi Arabia is the country most affected by the pandemic among the Arab Gulf monarchies with more than 360,000 officially recorded cases, including more than 6,000 deaths.

After having been in surplus for a long time, the state budget has constantly been in the red since 2014.

To cope with the fall in the price of crude, the kingdom is seeking to diversify its economy, by investing in particular in new technologies and in mega-infrastructure projects.

Thanks to its oil wealth, the kingdom has for decades been able to do without taxes.

It only introduced 5% VAT in 2018, as part of a plan to reduce its dependence on black gold.

© 2020 AFP