Saudi Arabia’s budget deficit tops $4bn in second quarter

Saudi Arabia’s budget deficit rose to SAR15.3bn ($4.09bn) in the second quarter, almost three times the shortfall recorded a year ago, finance ministry data showed on Wednesday, reflecting the impact of rising spending on state finances.

Overall revenue rose 12 per cent to SAR353.6bn during the quarter, but that was outpaced by a 15 per cent increase in spending to almost SAR369bn.

The kingdom’s sprawling Vision 2030 agenda calls for hundreds of billions of dollars in investments to develop new economic sectors and more sustainable revenue streams, reducing the world’s top oil exporter’s dependence on fossil fuels.

Oil revenue was just under SAR213bn in April-June, up 18 per cent year-on-year, while non-oil revenue rose 4 per cent.

Subsidies rose 68 per cent during the quarter and capital expenditures rose almost 50 per cent year on year.

The ministry’s budget performance report said the budget deficit stood at SAR27.7bn after the first six months of the year. The government is forecasting a budget deficit of SAR79bn for the whole year.

The International Monetary Fund (IMF), which earlier this month cut Saudi Arabia’s economic growth forecast by nearly a percentage point to 1.7 per cent, has estimated the kingdom would require oil prices at $96.2 to balance its 2024 budget.

To cover its financing needs, Saudi Arabia has already raised $17bn from the public debt markets this year, and its oil giant Aramco and sovereign wealth fund PIF, which is steering Vision 2030, have also raised billions from bonds.

Saudi Arabia’s total public debt stood at SAR1.149tn at the end of June, up from SAR1.05tn at the end of last year.

Read: Saudi Arabia’s Q2 GDP shrinks by an estimated 0.4%, oil weighs