1 Saudi Arabia to tap reserves for 2015 budget (San
Francisco Chronicle) Saudi Arabia's Cabinet has endorsed a 2015 budget that
projects a slight increase in spending and a significant drop in revenues due
to sliding oil prices, resulting in a nearly $39 billion deficit.
In a sign of mounting financial pressure, the Finance
Ministry said the government would try to cut back on salaries, wages and
allowances, which "contribute to about 50 percent of total budgeted
expenditures." That could stir resentment among the kingdom's youth, who
make up a majority of the population and are increasingly struggling to find
affordable housing and salaries that cover their cost of living.
The price of oil— the backbone of Saudi Arabia's
economy — has fallen by about a half since the summer. Saudi Arabia is
extremely wealthy, but there are deep wealth disparities and youth unemployment
is expected to mushroom absent a dramatic rise in private sector job creation.
The International Monetary Fund says almost two-thirds of employed Saudis work
for the government.
Associate Fellow and energy researcher at Chatham
House, Valerie Marcel, said massive government spending across the Gulf on
public sector salaries is "really the thing that keeps the lid on the
bottle." She said that for now the Arab monarchies of the Gulf can afford
to run deficits due to surpluses accumulated over the years from high oil
prices.
Saudi Arabia, the Arab world's largest economy, said
it would dig into its reserves to cover the difference between $229.3 billion
in projected expenditures and $190.7 billion in revenues for the coming fiscal
year. A quarter of expenditures will be spent on the education sector. The
budget is expected to allay investor concerns that the drop in oil prices could
lead to less government spending and reduced economic growth.
The kingdom's figures for the current fiscal year
show a deficit -- for the first time since 2009 -- of $14.4 billion. Total
expenditure had been projected at $228 billion, but ran 29 percent higher, at
$293 billion, due to expansion work at Islam's two holiest mosques, among other
projects, according to the Finance Ministry.
2 France jobless at new record (BBC) The number of
people seeking work in France has risen to a record high, official figures
show. The jobless total rose by 27,400 in November to 3,488,300 - the highest
level yet seen. That means the number looking for a job has risen by 5.8% in
the past year.
The jobless figures count the number of people
claiming benefits and looking for work with the National Agency for
Unemployment. The alternative international measure of unemployment, devised by
the International Labour Organisation and based on a regular survey, says that
unemployment in France rose to 2.84 million in the third quarter of the year,
giving an unemployment rate of 9.9%.
The French Prime Minister, Manuel Valls, and the
Economy Minister, Emmanuel Macron, outlined plans that included increasing the
number of businesses operating on Sundays, and opening up regulated sectors,
such as certain professions, to competition. It is not obvious this strategy
would succeed in reviving the economy, even if implemented fully. The
deregulation plan produced immediate protests by thousands of people in Paris
and faces opposition from within the ruling Socialist Party.
3 Japan pins hope on stimulus (Straits Times) Japan's
government approved on Saturday stimulus spending worth 3.5 trillion yen (S$38
billion) aimed at helping the country's lagging regions and households with
subsidies, merchandise vouchers and other steps, which it hopes will boost GDP
by 0.7 per cent.
The package was unveiled two weeks after a massive
election victory by Prime Minister Shinzo Abe's ruling coalition gave him a
fresh mandate to push through his "Abenomics" stimulus policies.
Given Japan's dire public finances, the government
will avoid fresh debt issuance and fund the package with unspent money from
previous budgets and tax revenue that has exceeded budget forecasts due to
economic recovery.
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