Riyadh – Mubasher: Saudi Arabia’s revenue is predicted to total SAR 770 billion in 2020; around SAR 63 billion or 8% less than the previously budgeted total of SAR 833 billion in last year’s budget statement.
According to the preliminary budget statement for fiscal year (FY) 2021, some fiscal and economic indicators were revised for the medium term, with significant changes to revenues, expenditures, and the fiscal deficit.
Jadwa Investment sees the main factor in the adjustment in overall revenue primarily related to lower than anticipated oil revenue, according to a report.
It further expected the kingdom’s government oil revenue to total at least SAR 100 billion higher than its current estimate of SAR 353 billion.
In the first half (H1) of 2020, government oil revenue stood at SAR 224 billion, boosted by Saudi Aramco's dividends, with nearly SAR 119 billion being paid to the Ministry of Finance (MoF).
Meanwhile, preliminary 2021-2022 government revenue forecasts were virtually unchanged, when compared to last year’s budget statement, despite an unplanned rise in value-added tax (VAT) from 5% to 15% between the two statements.
On expenditures, the MoF forecasts expenditure plans between 2021-23 to continue focusing on the development of mega-projects and on the implementation of Vision Realisation Programs.
According to the MoF, the fiscal deficit is predicted to hit SAR 298 billion (-12% of gross domestic product (GDP)), compared to SAR 187 billion (-6.4% of GDP) previously and versus Jadwa's forecast of SAR 366 billion (-13.4% of GDP).
Beyond this year, the MoF still expects the fiscal deficit to progressively narrow to less than 1% by 2023.
Public debt could grow more or less in line with previous forecasts between 2021-22 and will total SAR 1.029 trillion in 2023 (31.8% of GDP), according to the MoF.
“When comparing GDP growth rates between the 2020 fiscal budget statement and the recent preliminary statement, the economic fallout of COVID-19 becomes more apparent. More specifically, according to the MoF, the Saudi economy was expected to expand by an annual average of 2.3% between 2020-22 previously, whereas it is now forecasted to grow by 0.9% annually, over the same period,” the report concluded.
