Saudi budget deficit to drop to SAR 149 bln in 2018, says Jadwa Investment

Saudi Arabia’s fiscal position is expected to see sizable improvement if oil prices remained at the current average of $68 per barrel for the remainder of the year, as it would result in reducing the year’s fiscal deficit to SAR149 billion, compared to the projected SAR195 billion, Jadwa Investment said in a report.

Looking ahead into Q2 and beyond, continued yearly rises in tax income will likely take place, with taxes as a whole expected to generate revenue of SAR142 billion in 2018, a 46 percent year-on-year (YoY) increase, the firm said.

Non-oil revenue, which rose 11 percent YoY in Q1 to SAR 20 billion, is expected to have been driven by other revenues including investment returns from the Saudi Arabian Monetary Authority (SAMA) and Public Investment Fund (PIF).

Capital spending will likely rise significantly in the second half of 2018.

The ministry of finance has stated it is seeking to distribute spending in a more balanced manner throughout the fiscal year, in order to boost economic growth, which may suggest capital spending rising in Q2 2018, the report added.