(MENAFN- Khaleej Times) Saudi Arabia is trying to minimise the impact of plunging oil prices on its economy, the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz, said on Tuesday in a wide-ranging address which promised a more diversified economy.
"The low prices witnessed by the oil market are having an effect on the income of the kingdom. However, we are working towards minimising the impact on development," King Salman, 79, said in his first major speech since acceding to the throne on January 23.
Over the second half of last year the global price of crude oil dropped by about half, from above $100 a barrel. Yet the kingdom in December announced a 2015 budget that included a slight rise in spending to $229.3 billion with a projected fall in revenue to $190.7 billion. Those numbers leave the country with its first budget deficit since 2011.
Saudi Arabia is the Arab world's largest economy, and much of its spending is on health, education and social services as well as infrastructure.
Officials have said the kingdom's reserves, estimated at $750 billion, enable it to withstand the global crude price drop.
Saudi Arabia is the world's biggest crude exporter and oil makes up about 90 per cent of government revenue.
King Salman told government officials and other dignitaries that the search for new deposits of oil, gas and other natural resources in Saudi Arabia would continue.
"High petrol prices during the past few years have had a positive effect on the economy of the kingdom, in the development of projects," the King said.
But the plunge in oil prices has emphasised the need for economic alternatives, and King Salman said the kingdom's future economy "will be based on a number of foundations", with a growing number of small and medium enterprises.
"The next few years will be full of important accomplishments aimed at emphasising the role of the industry and the service sectors in the national economy."
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