Saudi Arabia will pay for parts of its $72 billion five-year economic reform plan by making efficiency savings and cutting spending on existing projects, Finance Minister Ibrahim Alassaf said on Tuesday.
Plunging oil prices since mid-2014 have placed great stress on Saudi Arabia's finances, causing a big budget deficit last year and forcing it to seek new sources of income, including taxes and other fees, and to make extensive spending cuts. The government aims to balance its budget by 2020, Alassaf said.
On Monday, the government published a five-year National Transformation Plan, part of a wider set of reforms launched in April as "Vision 2030".
The plan, which sets targets for government agencies and includes spending on new initiatives in housing, healthcare, mining and renewable energy, will cost an estimated 270 billion riyals ($72 billion) to implement.
Asked how the government could finance these projects while shrinking the budget deficit, Alassaf said they would take priority over other spending.
"Part of it will be made available from cancelled projects or projects that were downsized, and part of it will be made available from revenues that will rise -- oil and non-oil revenues." Efficiency gains would also help to fund the reform plan, he added.
Alassaf backtracked from an initiative listed in Monday's plan to impose income tax on foreign residents, who make up about a third of the kingdom's 30 million inhabitants.
Saudi Arabia is considering a proposal to tax expatriates, Alassaf said, but no decision has yet been made. Such a move could help raise new revenues and encourage the hiring of Saudi nationals by raising the cost of employing foreigners.
"There will be no tax on citizens. As for residents' tax, it is a proposal, nothing has been approved yet and it will be examined," Finance Minister Ibrahim Alassaf said in a panel discussion in Jeddah to discuss the reform plans.