Saudi Arabia recorded a budget deficit of 12.387 billion riyals ($3.30 billion) in the first quarter of 2024, the Finance Ministry said on Sunday, after falling oil revenues and rising spending weighed on the economy.
The kingdom must spend hundreds of billions of dollars to finance giga-projects aimed at weaning the economy off oil and boosting tourism and the private sector.
Oil revenues reached 181.922 billion riyals, while total revenues were 293.433 billion riyals, with non-oil revenues increasing slightly, although oil still dominates.
Public spending amounted to 305.820 billion riyals, surpassing last year’s 283.855 billion riyals.
The average price of international Brent crude is around $83.50 so far in 2024, while Saudi Arabia needs oil at $96.2 to balance its budget in 2024, according to forecasts by the IMF.
For the full year, Saudi Arabia forecast an annual budget deficit of 79 billion riyals and said it would scale back some of its major projects.
“There are challenges…we have no ego, we will change course, we will adjust, we will extend some projects, we will reduce some projects, we will accelerate some projects,” said Saudi Arabia’s Finance Minister Mohammed Al Jadaan spoke at the World Economic Forum meeting in Riyadh last week.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are expected to continue limiting production to support the market, and analysts expect Saudi Arabia’s fiscal situation to improve.
“The deficit is contained in the first quarter of 2024, and the overall fiscal situation is expected to benefit from a higher average oil price from the second quarter,” said Monica Malik, an economist at Abu-Dhabi-based ADCB. “This is consistent with our forecast of a smaller than expected deficit in 2024.”
($1 = 3.7505 riyals) (Reporting by Nayera Abdallah; Editing by Angus MacSwan and Barbara Lewis)
