Saudi Arabia said on Sunday 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 that helped to refill state coffers hammered by the pandemic.
After an expected fiscal deficit of 2.7% of gross domestic product this year, Riyadh estimates it will achieve a surplus of 90 billion riyals , or 2.5% of GDP, next year - its first surplus since it went into a deficit after oil prices crashed in 2014.
Riyadh plans to reduce military spending next year by around 10% from its 2021 estimates, the budget showed, a sign that the cost of the military conflict in neighbouring Yemen has started to ease. "We are telling our people and the private sector or economy at large that you can plan with predictability. Budget ceilings are going to continue in a stable way regardless of how the oil price or revenues are going to happen".The largest Arab economy shrank last year as the coronavirus crisis hurt its burgeoning non-oil economic sectors, while record-low oil prices weighed on its finances, widening the 2020 budget deficit to 11.2% of GDP.
Saudi Arabia forecast 2.9% GDP growth this year followed by 7.4% growth in 2022, according to the budget.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.
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