Saudi Arabia reports first quarterly budget surplus since 2014

Saudi Arabia’s finance minister said on Wednesday the kingdom recorded a budget surplus of SAR27.8bn ($7.41bn) in the January-March period, its first since oil prices plunged in 2014.

The finances of the world’s largest oil exporter were hit hard by the slump in crude prices, which led to a deficit of SAR367bn, or about 15 per cent of gross domestic product (GDP), in 2015.

Last year the kingdom, which has pledged to eliminate the deficit by 2023, ran a shortfall of SAR136bn, or an estimated 4.6 per cent of GDP, down from SAR230bn a year earlier.

The first-quarter surplus is something of a surprise, said Abu Dhabi Commercial Bank (ADCB) Chief Economist Monica Malik. “Based on crude price and production data, we expected a drop in oil revenues.”

Saudi Arabia would need oil priced at $80-$85 a barrel to balance its budget this year, an International Monetary Fund official told Reuters in February.

Oil prices have risen anew, hovering around six-month highs on Wednesday with Brent crude futures at $74.57 per barrel. Crude prices have risen since the United States said on Monday it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action.

Finance Minister Mohammed al-Jadaan told a financial forum that oil revenue rose to about SAR149bn in the first quarter from around SAR114bn in the same period last year, while non-oil revenues grew to SAR76.3bn, up from SAR52.3bn.

In the first quarter of last year, Saudi Arabia recorded a deficit of SAR34.3bn as the economy emerged from a recession in 2017 – the first time it had shrunk since the global financial crisis nearly a decade earlier.

The government had projected a deficit of SAR131bn this year, marginally lower than the SAR136bn of 2018.

After years of fiscal consolidation and weak growth, Riyadh plans to increase state spending by 7 per cent in 2019 to an all-time high of SAR1.106 trillion to spur growth.

Expenditure in the first quarter amounted to SAR217.6bn, Jadaan said, slightly higher than last year.