Sunday 13 June 2021

Decline in Saudi budget deficit due to higher oil: Moody’s

LONDON, May 6, 2021

Decline in Saudi Arabia’s budget deficit during the first quarter of this year relative to the fourth quarter of 2020 is mostly due to higher oil prices and a large seasonal drop in spending, said Moody’s.

“But there is also a material structural improvement in the non-oil fiscal balance when compared to the first quarter on 2020. This improvement reflects a significantly higher non-oil revenue of 39%, largely due to the tripling of the value added tax rate last July, and the 47% cut in capex, which is in line with this year’s approved budget,” said Alexander Perjessy, Vice-president, Senior Analyst at Moody’s.

“If oil prices average around $60/barrel in 2021, we would expect Saudi Arabia’s full-year deficit to narrow below 5% of GDP from 11.2% of GDP in 2020, helping to reverse some of last year’s increase in the government’s debt-to-GDP ratio,” he added. – TradeArabia News Service



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