DLONDON (Dispatches) - Saudi Arabia’s budget deficit narrowed to 4.6 billion riyals ($1.2 billion) in the second quarter, boosted by higher oil prices and surge in tax revenue.
The world’s largest crude exporter saw oil revenue rise 38% in the period from April to June compared to the same period last year, while non-oil revenue tripled, reaching 116 billion riyals, according to a finance ministry statement.
That was largely driven by increased tax revenue after the government tripled value-added tax to 15% last July – and the comparison with a low base during last year’s lock-down. Spending remained restrained, at around 253 billion riyals.
Higher oil prices are giving Saudi Arabia’s public finances a boost after last year’s crisis sent its budget deficit soaring to nearly 300 billion riyals. Officials aim to slash that figure to 141 billion riyals in 2021, targeting a deficit of around 5% of gross domestic product. But so far they’re set to significantly beat that goal, accumulating a deficit of just 12 billion riyals in the first half of the year as they keep spending under their target — with capital expenditures down 36% in the first half compared to the same period last year.