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Oil's next casualty: Government budgets
[LONDON] The 56 per cent drop in oil prices in the last six months is fueling more than just jet engines and road trips.
It's also burning through the cushy budget surpluses enjoyed by some of the world's biggest oil-producing nations.
Saudi Arabia, the world's top producer of crude, will see the budget surplus it has enjoyed in the past turn into a deficit of 4.7 per cent of gross domestic product this year, according to the median estimate of eight economists surveyed by Bloomberg. That would be the first shortfall since 2009, according to International Monetary Fund data.
The Middle Eastern nation, which derives about 90 per cent of its budget revenue from oil, recorded a surplus of 8.7 per cent of GDP in 2013.
(Data for 2014 surpluses or deficits aren't yet available in many countries, so we're using 2013 for comparisons.)
Oil exporters Kuwait, Qatar and the United Arab Emirates will also see their surpluses take hits this year, according to the Bloomberg surveys, which were conducted in December and January.
Russia, which has seen seen the effects of sanctions by the US and European Union compounded by the drop in oil prices, is forecast to see a budget shortfall of 2.3 per cent of GDP, wider than the 0.85 per cent in 2013.
For countries that are net importers of oil, though, the budget outlook looks brighter.
Japan will be able to shave a budget deficit amounting to 9 per cent in 2013 to 6.8 per cent this year, Bloomberg's survey found, as its central bank embarks on record stimulus.
The UK, which only became a net importer of fossil fuels in 2013, according to the US Energy Information Administration, will narrow its budget deficit to 4.2 per cent of GDP from 5.9 per cent two years ago, analysts figure.