RIYADH, Dec 22 (Reuters) - Saudi Arabia reported major progress on Thursday in cutting a huge state budget deficit caused by low oil prices, and said it would increase government spending next year to boost flagging economic growth.
The deficit shrank to 297 billion riyals ($79 billion) in 2016. That was well below a record 367 billion gap in 2015, and below the government’s projection in its original 2016 budget plan of a deficit of 326 billion.
In its 2017 budget plan, Riyadh said it would increase spending to 890 billion riyals from the 840 billion originally projected for 2016. But next year’s deficit will shrink further to 198 billion because of higher oil prices and non-oil revenues, the government said. (Reporting by Marwa Rashad and Reem Shamseddine in Riyadh and Hadeel Al Sayegh in Dubai; Writing by Andrew Torchia; Editing by Louise Ireland)