Saudi authorities have increased prices on petrol by 40% and removed subsidies on petrol, diesel, kerosene and water.
This move became necessary after the world’s leading oil producer announced a record $98bn budget deficit on Monday citing rock-bottom global petroleum prices.
The cuts would see the oil-dependent country sell petrol to domestic consumers at N47 (24 US cents) per litre, The Economist confirmed.
Public revenues are the lowest since 2009 when oil prices dived as a result of the global financial crisis. Saudi income for 2015 was 15 percent lower than projections and 42 percent less than in 2014.
In its 2016 budget, presented by King Salman on Monday, the deficit will be reduced to N17.2 trillion ($87 billion), with the total budget at N44.4 trillion ($224 billion).
Like Nigeria, the Kingdom is forced to cut subsidies and resort to domestic and foreign borrowing in order to meet its budgetary obligation of funding deficit.
“The budget comes in light of lower oil prices and economic and financial challenges on regional and international levels…our economy, with the help of God, has what it takes to overcome the challenges,” King Salman said while addressing the nation.
Here in Nigeria, the Minister of State for Petroleum announced a temporary ban on subsidy on Sunday after he visited the Kaduna refinery, saying it may be re-introduced in January.
But with the Saudi move, will Nigeria also follow suit and remove oil subsidy.