Saudi public spending slowdown will impact banks – Moody’s

The planned slowdown in public spending in Saudi Arabia will prove credit negative for banks in the kingdom, ratings agency Moody’s Investors Service has said in a new report. Following years of high expenditure, the Saudi government is planning to moderate the pace of spending due to the persistent drop in oil revenues. The International Monetary Fund estimates that Saudi will face a budget deficit of over $100bn this year, amounting to 21.6 per cent of gross domestic product. Moody’s anticipates that government spending growth will slow to 2 per cent in 2014 and 4 per cent in 2017, from 14 per cent on average between 2010 and 2014.