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RIYADH, Nov. 22 (Xinhua) -- A Saudi study has predicted a reduction in the deficit of the current and next year's budget because of government plans to cut spending, while this will slow down business activities of the private sector, Al Eqtisadiya online news reported on Tuesday.
The Saudi cost cut approach to deal with the dropping oil prices in international market will reduce the gross domestic product (GDP) of the non oil sector, said the study, conducted by Jadwa Investment local company.
The policy of the cost cuts led to a decision earlier this month by the Council of Economic and Development Affairs (CEDA) to cancel projects valued at up to 266.7 billion U.S. dollars, citing the reason that they would not meet the expected economic and development returns.
Also, the CEDA announced it was settling overdue payments to the private sector next month before the end of the fiscal year.
The results of the study contradict with the goals of the country to end oil-dependency by empowering the private sector as a key element toward economic growth.
