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- Finance Ministry sees budget surpluses from 2023
RIYADH: Saudi Arabia’s budget deficit is likely to be narrowed down to SR52 billion ($13.8 billion) in 2022 as compared to SR85 billion in 2021, according to the pre-budget forecast of the Ministry of Finance. This forecast will be reviewed this week when the fiscal budget is announced.
In 2022, Saudi Arabia’s revenues are expected to reach SR903 billion, while spending SR955 billion.
This projection comes after the Kingdom’s budget deficit narrowed sharply in the first six months of this year due to more fiscal discipline and increasing non-oil revenue. It dropped 92 percent to SR12 billion.
Deficit
The current projections show the Kingdom maintaining a deficit of nearly 1 percent of the gross domestic product through 2024.
National debt
Saudi Arabia’s national debt is expected to be at SR989 billion, or 31.3 percent of its gross domestic product in the next fiscal year, according to the Ministry of Finance forecast.
The debt will jump from 30.2 percent of the country’s GDP that is forecast this year, according to the statement. Next year the principal repayments on the debt will reach SR76 billion, the ministry said, adding that in “the medium-term, public debt levels are projected to remain constant.”
“Through coordination between the Ministry of Finance and the National Debt Management Center, the annual borrowing plan is being prepared within the framework of a medium-term debt strategy,” the statement said.
Rational spending
Commenting on the budget statement, Talat Zaki Hafiz, an independent financial analyst based in Riyadh, told Arab News the indicators for the 2022 budget “target economic and fiscal growth driven by rational public spending.”
He said growth in the non-oil GDP and the performance of the private sector supported the Kingdom’s expected financial standing.
“Efficient spending also helped a lot in achieving such good results,” he said. “Finally the focus of the Kingdom on privatization will support in enhancing government’s revenues and reducing expenditures.”
Budget surpluses
However, keeping in view the Kingdom’s economic rebound from the coronavirus disease pandemic, the ministry has forecast budget surpluses from 2023.
The Kingdom will post a surplus of about SR27 billion in 2023, rising to SR42 billion in 2024, the ministry said in a report. That compares with a projected deficit of SR85 billion in 2021 and SR52 billion in 2022.
Government revenue will slip to SR903 billion in 2022 from SR930 billion in 2021, but will have reached SR992 billion by 2024, the Ministry of Finance said.
The government aims to sustain the spending ceilings approved last year for the medium-term, the ministry said. Expenditure is projected to reach approximately SR955 billion for fiscal year 2022 before falling to SR951 billion in fiscal year 2024.
The Saudi government aims to continue economic and fiscal reforms it has implemented under Vision 2030.
The annual borrowing plan is being prepared to meet funding needs within the framework of a medium-term debt strategy, through the coordination between the ministry and the National Debt Management Center.
SAMA deposits
Government deposits at the Saudi Central Bank are expected to exceed initial projections in the fiscal year 2022, and to continue to grow due to expected surpluses in fiscal year 2023 and fiscal year 2024.