RIYADH: Saudi Arabia yesterday said it expected to post its first budget surplus in nearly a decade next year, as it plans to restrict public spending despite a surge in oil prices.
After an expected fiscal deficit of 2.7 per cent of gross domestic product this year, Riyadh estimates it will achieve a surplus of 90 billion riyals ($23.99bn), or 2.5pc of GDP, next year – its first surplus since it went into a deficit after oil prices crashed in 2014.
The world’s biggest oil exporter plans to spend 955bn riyals next year, a nearly 6pc expenditure cut year on year.
Revenues this year jumped by almost 10pc to 930bn riyals from the budgeted 849bn, driven by higher crude prices and oil production increases as global energy demand recovered.
Next year, the kingdom expects revenues of 1.045 trillion riyals.
“We are totally now decoupling the government expenditure from the revenue”, finance minister Mohammed Al Jadaan said.
Saudi Arabia forecast 2.9pc GDP growth this year followed by 7.4pc growth in 2022, according to the budget document.
The kingdom does not disclose the oil price it assumes to calculate its budget. Economists last year said it was likely based on a conservative price of around $46-$48 per barrel.
For 2022, it was likely basing its budget on an oil price assumption that could be as low as $50-$55 per barrel, estimated Monica Malik, chief economist at Abu Dhabi Commercial Bank.
This could leave extra room for further improvement in its fiscal position: Brent crude oil has climbed this year and is expected to average about $70.6 per barrel in 2021 and decline slightly to $70.05 next year, according to the Energy Information Administration.