Last Sunday, Saudi said it expected to post its first budget surplus in nearly a decade next year, as it plans to restrict public spending.
After an expected fiscal deficit of 2.7% of GDP in 2021, Riyadh estimates it will achieve a surplus of $24 billion, or 2.5% of GDP, in 2022, its first since it went into a deficit after oil prices crashed in 2014.
“The surpluses will be used to increase government reserves, to meet the coronavirus pandemic needs, strengthen the kingdom’s financial position, and raise its capabilities to face global shocks and crises,” Saudi Crown Prince Mohammed bin Salman was quoted as saying by the state press agency (SPA).
The kingdom plans to spend $258 bn next year, according to a budget document.
Riyadh plans to reduce military spending next year by around 10% from its 2021 estimates.
Revenues jumped this year by almost 10% to $251 bn driven by higher crude prices and oil production hikes as global energy demand recovered.
Next year, the kingdom expects revenues of $282 bn.
Saudi Arabia forecast 2.9% GDP growth this year followed by 7.4% growth in 2022, according to the budget, and based on an oil price assumption that could be as low as $50-$55 per barrel. Brent crude oil has climbed this year and is expected to average about $70 per barrel in 2021 and 2022, according to the Energy Information Administration.
Saudi Arabia plans more than $3 trn in investment in the domestic economy by 2030, a target that economists have said will be tough to meet.
Saudi’s debt and deficit
Saudi’s budget deficit is likely to be narrowed down to $13.8 bn in 2022 as compared to nearly reaching $23 bn in 2021, according to the pre-budget forecast of the Ministry of Finance.
The current projections show the Kingdom maintaining a deficit of nearly 1% of GDP through 2024.
The country’s national debt is expected to be at $267 bn, or 31.3% of its GDP in the next fiscal year, according to the Ministry of Finance forecast, when the principal repayments on the debt will reach $20.5 bn.