Saudi efficiency review finds up to $4.5 bln of cost savings -minister


Reuters

* Around 15 bln-17 bln riyals of savings identified
    * Saudi ready to start value-added tax on Jan. 1
    * Will implement even if Gulf neighbors not ready

    By David FrenchWASHINGTON, April 20 (Reuters) - The body set up by Saudi
Arabia to cut the costs of government projects has identified up
to 17 billion riyals ($4.53 billion) in further efficiency
savings, the kingdom's finance minister told Reuters on
Thursday.
    Government sources had told Reuters earlier this week that
Riyadh was ordering ministries and agencies to review billions
of dollars' worth of unfinished infrastructure and economic
development projects with a view to shelving or restructuring
them. [nL8N1HO0G1]
    The action forms part of a reform plan by the world's top
oil exporter aimed at shifting its economy away from reliance on
hydrocarbon revenues and paring back support for a generous
welfare state to cope with the reduction in crude prices.
    Mohammed al-Jadaan said this was the second major effort by
the Bureau of Capital and Operational Spending Rationalization
since its establishment, after previous efforts highlighted 80
billion riyals of savings in 2016. [nL5N1FN2WU]
    "They just were making sure that they (the projects) are
done in the most efficient manner. They are about to conclude
their work and they have identified about 15 billion riyals or
17 billion riyals of savings so far," Jadaan said, without
elaborating on the nature of the savings.
    Lower oil prices have left Saudi battling huge budget
deficits. The deficit is expected to hit 198 billion riyals or
7.7 percent of GDP this year, after peaking at 367 billion
riyals or 15 percent of GDP in 2015.
    The introduction of a 5 percent value-added tax should also
bolster the Saudi government's coffers. Jadaan said Saudi is
"ready and willing to implement" the tax on schedule on Jan. 1,
2018 and it could happen without other Gulf countries.
    The six Arab monarchies of the Gulf Cooperation Council are
all aiming for an identical start date for the tax, but
economists and officials in some countries have said privately
that simultaneous introduction may not be feasible.
    This is due to the complexity of creating the administrative
infrastructure to collect the tax and the difficulty of training
companies to comply with it in a region where taxation is
minimal. [nL8N1FX087]
    Austere conditions have weighed on Saudi's economy, which
has traditionally been reliant on state spending to fuel growth.
    Economists polled by Reuters this week trimmed their average
growth forecast for 2017 to just 0.5 percent from 0.8 percent,
as Riyadh shoulders much of the burden of oil output cuts under
a global deal among producers to prop up prices. [nL8N1HR24I]
    To help bolster the economy, Saudi is preparing a number of
mega development projects. The first, an entertainment district
south of Riyadh that will house sports, cultural and
recreational facilities including a safari and a Six Flags
<SIX.N> theme park, was unveiled this month. [nL8N1HG04I]
    Jadaan said further schemes would be announced in October,
when sovereign wealth fund the Public Investment Fund unveils
its strategy.

 ($1 = 3.7498 Saudi riyals)

 (Additional Reporting by Reem Shamseddine in Khobar, Saudi
Arabia, Andrew Torchia in Dubai; Editing by Tom Brown)
 ((davidj.french@thomsonreuters.com; +1-646-223-5211; Reuters
Messaging: davidj.french.thomsonreuters.com@reuters.net))

Keywords: SAUDI ECONOMY/SAVINGS



This article appears in: Stocks , World Markets , Politics
Referenced Symbols: SIX


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