Saudi Ara­bia’s bud­get deficit nar­rows as crude rev­enue rises

Muscat Daily - - BUSINESS -

Riyadh, Saudi Ara­bia - Saudi Ara­bia’s sec­ond-quar­ter bud­get gap nar­rowed to SAR46.5bn from the same pe­riod last year af­ter in­come from oil ad­vanced, while non-oil rev­enue fell.

To­tal rev­enue climbed six per cent in the sec­ond quar­ter to SAR163.9bn af­ter in­come from crude jumped 28 per cent, the Fi­nance Min­istry said in a state­ment. That helped nar­row the deficit from SAR58.4bn in the same pe­riod last year, even though rev­enue from non-oil sources fell by 17 per cent. Spend­ing dropped 1.3 per cent, to SAR210.4bn.

“It’s re­ally a story of stronger oil rev­enue and on­go­ing fis­cal re­straint,” said Mon­ica Ma­lik, chief econ­o­mist at Abu Dhabi Com­mer­cial Bank. “Much of the nar­row­ing in the deficit seen in the first half of 2017 is due to higher oil rev­enue, ver­sus in 2016,”

Saudi Ara­bia is re­port­ing quar­terly bud­get fig­ures for the first time this year in an ef­fort to in­crease gov­ern­ment trans­parency, part of Crown Prince Mo­hammed bin Sal­man’s ‘Vi­sion 2030’ plan for life af­ter oil. He has promised to over­haul the Saudi econ­omy by cut­ting en­ergy sub­si­dies, pri­vatis­ing state en­ti­ties and sell­ing shares in state gi­ant Saudi Ara­bian Oil Co, known as Aramco. Rais­ing nonoil rev­enue through taxes and fees is cen­tral to that plan.

The gov­ern­ment said in De­cem­ber that it planned to spend a to­tal of SAR890bn this year, with an ex­pected end-of-year deficit of SAR198bn. The bud­get deficit for the first quar­ter was SAR26.2bn.

“To­day’s quar­terly up­date presents clear ev­i­dence of progress to­ward achiev­ing fis­cal bal­ance by 2020,” Fi­nance Min­is­ter Mo­hammed al Jadaan said in the state­ment. “Whilst eco­nomic chal­lenges re­main, we are con­fi­dent in achiev­ing our fis­cal deficit pro­jec­tions for 2017.”

De­spite the gov­ern­ment’s ef­forts to de­crease its re­liance on oil in­come, its share of over­all rev­enue rose to 62 per cent in the sec­ond quar­ter, com­pared to 51 per cent in the same pe­riod last year, re­flect­ing the rise in oil prices. Non-oil in­come fell in the same pe­riod largely be­cause of a de­cline in ‘other rev­enues’, which in­clude re­turns on in­vest­ments by the cen­tral bank and the Pub­lic In­vest­ment Fund. Rev­enue col­lected from cus­toms taxes and other taxes, in­clud­ing the zakat reli­gious levy, also de­clined.

Com­pen­sa­tion for em­ploy­ees rose to SAR103bn in the sec­ond quar­ter from SAR94bn in the first quar­ter. How­ever it’s un­clear whether the data in­cluded the April restora­tion of ben­e­fits and al­lowances for gov­ern­ment em­ploy­ees that had been cut.

Saudi Ara­bia’s Fi­nance Min­is­ter Mo­hammed al Jadaan

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