Saudi ministries asked to cut contract spending by 5 per cent

15 March 2016

Cost cutting includes construction contracts included in the 2016 budget

The Saudi government has ordered ministries to cut spending on contracts by 5 per cent as it attempts to save cash and mitigate the impact of lower oil revenues.

Reuters reported, citing a document sent by the central government to all ministries, that the measure was proposed by the ministry of economy and planning to “rationalise spending and increase its efficiency.

The document instructs ministries to reduce the value of outstanding contracts signed to support operations, as well as construction contracts included in the 2016 state budget, by “not less than 5 per cent of remaining obligations”, the report said.

Riyadh reported a budget deficit of nearly $100bn in 2015 and is pushing through a series of measures to help balance the budget this year.

The Ministry of Economy and Planning is due to submit the much-awaited draft of National Transformation Plan (NTP) to the royal court by the end of March, sources told MEED.

The programme outlines government expenditure cuts, spending plans for projects that will still go ahead, a list of the state entities to be privatised and a schedule pinning down the timelines for the sale of these assets to private investors.

Lower oil prices have driven governments across the GCC to tighten their purse strings. MEED revealed in early March that the UAE’s state-owned Abu Dhabi National Oil Company is slashing payments owed to its suppliers by 20 per cent as it attempts to cut costs.

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