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Higher international oil prices helped Saudi Arabia shrink its budget deficit by 71 percent from the first quarter of 2016 to US$6.9 billion (26 billion riyals) as of end-March 2017.
State revenues jumped by a similar rate, 72 percent, to US$38.4 billion (144 billion riyals), with oil revenues surging by 115 percent to US$29.9 billion (112 billion riyals). Non-oil revenues inched up by 1.3 percent to US$8.56 billion (32.1 billion riyals).
The figures were announced by Finance Minister Mohammed Al-Jadaan at a press conference, where he also noted that “Our main focus is to achieve the vision of Saudi Arabia 2030 and our ministry is working with both public sector partners to increase the workings of the private sector in the kingdom.”
The reported figures indeed highlight the Kingdom’s continued overdependence on oil revenues and lack of economic diversification, which makes the country extremely vulnerable to price movements on international markets.
During the first quarter of the year the going was good. Saudi Arabia cut its crude oil output more than it had agreed to with other OPEC members and non-OPEC producers and that became a major bullish factor in oil price developments. But last month, prices started to fall, reaching lows last seen before the agreement was announced.
As part of efforts to strengthen its economy, Riyadh will be listing 5 percent of state oil giant Aramco, which is currently hunting for foreign bourses, on which to list the shares, besides the local Tadawul.
In addition, as Bloomberg notes, the government has switched to quarterly budget performance reporting from annual reports in a bid to improve transparency and boost trust in what it reports.
Riyadh plans to close the budget gap by 2020 through privatization, investments, and diversification into renewable energy, to reduce its dependence on crude.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.