Most US car buyers aren’t…
A US defense official was…
OPEC’s biggest producer Saudi Arabia would need oil prices at US$80-85 per barrel in order to balance its 2019 budget, Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), has told Reuters.
Saudi Arabia’s officials, including Energy Minister Khalid al-Falih, don’t discuss publicly ‘targeted oil prices’ or a desired level of oil prices that would be comfortable to the Kingdom’s finances, but analysts and the IMF have estimates what oil price level would be enough to cover Saudi Arabia’s budget spending.
For this year, “if you take the (2019) budget as presented with everything remaining equal, a breakeven point would be around $80-$85 dollars,” the IMF’s Azour told Reuters.
The oil price slump in the fourth quarter of 2018 has certainly affected the public finances of the biggest oil exporting nations, including OPEC’s biggest, Saudi Arabia.
Although Azour doesn’t see the price slump affecting the Kingdom’s ability to finance itself, he expects that those lower prices would weigh on the fiscal position of Saudi Arabia.
For this year, the Kingdom announced its highest-ever budget, of around US$295 billion (1.1 trillion Saudi riyals). This breaks the previous record set in 2018, with budget spending at US$261 billion and it might spark concerns about the economy’s sustainability as the increase for 2019 includes a hefty bill for cost-of-living allowances introduced last year.
Last month, the IMF slashed its forecast for Saudi Arabia’s economic growth this year to 1.8 percent, down by 0.6 percentage point from the previous economic outlook in October, due to lower oil prices and lower oil production growth.
The IMF sees growth in Saudi Arabia for 2019 at 1.8 percent, compared to 2.4 percent expected last October, while it lifted its 2020 economic growth forecast by 0.2 percentage point from October to 2.1 percent.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.