A vehicle drives past the King Abdullah Financial District in Riyadh, Saudi Arabia, October 18, 2017. REUTERS/Faisal Al Nasser
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Saudi Arabia's plans to sell state assets – including a stake in energy giant Saudi Aramco – are becoming even more important to its finances as a recession slows Riyadh's effort to close a budget deficit caused by low oil prices. Last December, Riyadh released a plan to abolish the deficit by 2020, cutting it from $79 billion or 12.3 percent of gross domestic product in 2016 via steps such as domestic energy price hikes and tax rises. Many economists expect the government to hit its deficit target of $53 billion or roughly 8 percent of GDP this year, helped by higher oil prices.Growth of the non-oil sector of the economy has already dropped near zero, so there may be little room for Riyadh to introduce more austerity over the next 12 months – or at the very least, it may need to soften its steps.At the $2 trillion valuation which Saudi officials have predicted for Aramco, selling a 5 percent stake would bring $100 billion.
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