(MENAFN - The Journal Of Turkish Weekly) Despite a record deficit and falling oil prices creating a drastic impact on the world's leading crude exporter Saudi Arabia continues to spend heavily on military operations in Yemen.Since 2014 global oil prices have declined sharply. Falling byover 60% a barrel ofcrude currently sells forless than $50 and those figures have had a drastic impact onthe Saudi Arabian economy which relies onoil forroughly 90% ofits revenue.
On Monday the kingdom's finance ministry posted a budget deficit of $98 billion for2015 the highest inthe 83-year-old nation's history. Total revenue was estimated at $162 billion and that income for2015 was 15% lower thanprojected.
The country's Income fell a full 42% fromthe previous year.
The ministry doesn't foresee a recovery any time soon. Projections show an $87 billion deficit fornext year.
As Riyadh suffers economic difficulties it may have its own policies toblame. In an effort toput competing oil producers outof business - aswell asUS shale-oil extraction companies- Saudi Arabia and other OPEC nations have increased production. That increased supply has driven downdemand and consequently prices.
To remedy the situation Riyadh announced an increase infuel costs forits citizens athome byas much as50%. Prices forlower-grade petrol will rise by67%.
The kingdom will also make cuts toutility subsidies such aselectricity and water a move that will anger many Saudis. The government is also considering options toincrease charges forpublic services and could make cuts toemployee wages and benefits.
One area which will remain unaffected bythe deficit is the military sector. A large portion ofRiyadh's 2015 budget went towardthe ongoing military intervention inYemen. Earlier this year Reuters estimated that Saudi Arabia would spend approximately $175 million per month tosupports its air campaign withanother $500 million fora ground incursion.
Since May the Saudi government has sold off $1.2 billion ofits $9.2 billion holdings inEuropean stocks tohelp cover those costs. Riyadh has also withdrawn $80 billion fromits reserves in2015.
The International Monetary Fund has warned the Saudi government that continued spending would deplete those reserves withinfive years.
Riyadh has not released a report onthe true costs ofthe war butthe finance ministry has already set aside some $57 billion - a quarter ofthe nation's budget - fordefense spending next year.
The United Nations estimates that asmany as2400 Yemeni civilians have been killed duringthe Saudi-led bombing campaign. Another 1 million people have been internally displaced and asmany as20 million are inneed offood water and medical supplies.