Riyadh – Mubasher: Bank of America (BofA) Merrill Lynch expected that Saudi Arabia will be of the largest issuers of sovereign debts in 2017 along with Argentina, Kuwait and Indonesia which represent 32% of total issuance.
The budget statement and medium-term programme imply three Saudi policy priorities: easing near-term austerity, supporting higher oil prices and introducing non-oil revenue reforms, BofA) Merrill Lynch stated.
The report noted that the budget is in line with oil prices of $55 per barrel (pbl) ($65 pbl target, $40 pbl floor).
BofA forecasted that 2017 fiscal deficit will shrink on back of higher oil prices, discipline in spending, and non-oil revenue measures.
2017 budget deficit would stand at SAR 316 billion ($85 billion, 12% of GDP) due to higher oil prices of $57pbl, compared with a deficit of SAR 402 billion in 2016 ($107.5 billion, 16.9% of GDP) and SAR 385 billion in 2015 ($102 billion, 15.9% of GDP), the report added.
The company pinpointed that the repayment of contractor dues worth SAR 80 billion, $21 billion) and spending related to surplus projects by around SAR 25 billion; $6.7 billion contributed to widening 2016 fiscal deficit.
The report mentioned that the Saudi authorities are planning to introduce cash allowances in the first quarter of the year.
This is likely to allow further selective energy subsidy reform in H2-17 (including electricity, gasoline and diesel), BofA Merrill Lynch commented.
The report mentioned that the taxes are likely to be introduced in Q2-17, and an expat levy will come into force in July 2017.
