LONODN (Bloomberg) - Saudi Arabia reported a deficit of 2.91 billion riyals ($770 million) in the first quarter of the year as the government increased spending on salaries and economic diversification projects.
Government income rose in the first quarter, driven by higher non-oil revenues, but was outpaced by a nearly 30% rise in spending, according to a budget report from the Ministry Of Finance published Sunday. The government “maintains a great ability to continue the expansionary fiscal policy and consider accelerating projects,” according to a seperate statement on the official Saudi Press Agency.
Oil revenues fell by 3 percent to 179 billion riyals in the first three months of the year on lower crude prices.
Non-oil revenues, which the government has focused on growing as it looks to move away from boom-bust cycles of the past, rose by 9 percent. That was driven by receipts from taxes on income, profit and capital gains rising by 75 percent.
While Saudi Arabia is predicting another budget surplus this year, after surging oil prices helped the budget back into the black for the first time in nearly a decade last year, other forecasters are predicting a deficit. The International Monetary Fund hiked the oil price Saudi Arabia needs to balance its budget this year to over $80 a barrel. The Kingdom doesn’t reveal an oil price assumption in its budget.