Saudi growth 'close to zero' amid oil price drop, cuts

Saudi Arabia's economy is due to stall this year due to lower oil revenue, with growth "close to zero" according to the International Monetary Fund.

In June, oil prices reached a seven-month low, in a fresh blow to Saudi-led plans to increase prices through production cuts.

The IMF recently lowered its 2017 growth forecast to 0.1 percent, down from 0.4, citing OPEC production cuts, uncertainty over oil prices, and reforms Saudi Arabia is taking to reduce its reliance on oil, Bloomberg reported.

Non-oil growth projection was also lowered to 1.7 percent from 2.1, the international financial body said.

Saudi Arabia's economy contracted in the first quarter of 2017 for the first time since 2009 due to austerity measures and lower oil prices, Bloomberg reported.

The economic outlook will come as a blow to Crown Prince Mohammed bin Salman and test Saudi Arabia's resolve to push through stringent reforms.

Last year he unveiled Vision 2030, an ambitious 15-year blueprint launched to diversify and modernise the oil-dependent economy.

The IMF said, however, that it welcomed Saudi Arabia's direction, which would cause the fiscal deficit to narrow "substantially" in coming years.

The financial body also commended the government for removing energy subsidies to encourage a gradual phasing of price increases, allowing businesses and households time to adjust.

Earlier this month, foreigners working in Saudi Arabia started to pay taxes for dependents, as the Gulf state looked at ways to find funds after a sharp drop in oil prices.

The new law applies to expatriates in the private sector who for decades enjoyed tax free living. 

Saudi Arabia's ambitious Vision 2030 plan will include the sale of a five percent stake in state-owned oil giant Aramco at between $2 trillion and $2.5 trillion.