(Bloomberg) — Saudi Arabia expects to record its first budget surplus since 2013 next year, as higher oil prices and production boost the kingdom’s finances.
This year’s budget deficit of 85 billion riyals ($22.7 billion), or 2.7% of gross domestic product, was the smallest since 2014, according to a Finance Ministry statement. Next year, government spending is expected to fall to 955 billion riyals, while revenue is estimated to rise to 1.05 trillion riyals, leaving a surplus of 90 billion riyals.
Officials expect the economy to expand 2.9% this year and grow by a further 7.4% in 2022, according to the statement.
The results are a sharp turnaround from last year, when energy market turmoil and the pandemic combined to crater the kingdom’s nascent economic recovery from the last oil price rout. But they also underlined that despite years of efforts by Crown Prince Mohammed bin Salman to diversify the economy — including progress in new sectors like entertainment — the fortunes of the world’s largest crude producer still rise and fall with the price of oil.
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That could spell trouble next year, as the emergence of the omicron variant of the coronavirus puts economic recoveries around the world in question. After the variant was first identified in late November, oil plunged into a bear market, with benchmark prices dropping around $10 in a single day — though there’s little sign yet of a major impact on demand.
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