Defense consultancy IHS Jane’s says Saudi defense spending will be $48.7bn in 2015, a 2 per cent contraction over last year but will reach $62bn by 2020.
Craig Caffrey, IHS principal defence budget analyst, said “We certainly expect a significant slowdown in the short term but longer term prospects remain strong,” The Financial Times (paywall) reports. “
Saudi Arabia may become the 5th largest military spender in the world by 2020, according to IHS Jane’s.
“The Kingdom has only cut defense and security expenditure once over the last 15 years,” Caffrey said. By 2020, Saudi Arabia will be the fifth-largest spender in the world.
With military spending to increase in the face of dual threats from Yemen to Saudi Arabia’s south, and the self-described Islamic State or Da’esh in Iraq and Syria, the Kingdom will face a growing budget deficit this year. According to the IMF, Saudi Arabia will post a budget deficit equal to 20% of economic output this year.
The IMF said that in the next few years, Saudi Arabia will need “a sizable fiscal policy consolidation,” according to Bloomberg News.
