Saudi Arabia’s stock market fell early on Tuesday 27/10 as the oil minister said the government was considering whether to raise domestic energy prices, while Egypt slipped because of weak global equities.
Asked on the sidelines of a mining conference if he expected domestic energy prices to increase in the near term, Ali al-Naimi said: “What you are asking is: is it under study? And the answer is yes.”
Naimi did not give any details of the possible changes, which could form part of a major tightening of fiscal policy next year as the government reduces a budget deficit estimated at well over $100 billion in 2015.
Domestic prices of gasoline, other fuels and the gas feedstock used by Saudi petrochemical producers are heavily subsidised by the government and among the lowest in the world. Raising them could drag on the economy, at least initially.
In the past, officials have spoken privately of the reforms, and the stock market has been anticipating them. But Naimi’s remarks were the first public confirmation from such a senior official that the measures were being studied.
The Saudi stock index dropped 0.4 percent as banks in particular fell, with Alinma Bank, the most heavily traded stock, losing 1.0 percent.
The petrochemical sector index edged down 0.3 percent but leading petrochemical producer Saudi Basic Industries added 0.6 percent.
In Egypt, the index dropped 0.8 percent with activity still focusing on real estate developer Amer Group , down 3.6 percent, and its spin-off Porto Group , up 6.7 percent.
