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Saudi Arabia reported a fiscal deficit of US$1.95 billion (7.3 billion riyals) for the third quarter of the year, down from US$1.97 billion (7.4 billion) in the previous quarter, The National reports, citing official figures from the Finance Ministry. Over the first nine months of the year, the deficit shrank by a hefty 60 percent, driven by the improvement in oil revenues but also thanks to an uptick in non-oil revenues, Finance Minister Mohammed Al Jadaan said.
“This [improvement in fiscal performance] has been the case despite the increase in spending on various social initiatives such as the Citizen Account, living allowances, and capital expenses on infrastructure,” the official said, adding that the government in Riyadh is determined to stick to its reform initiatives and stimulate economic growth.
Earlier this month, a Finance Ministry official told media that plans were for the Kingdom to break even by 2023 by combining structural reforms with greater employment.
Saudi Arabia was forced to tighten its belt during the last price crash, and it has demonstrated determination to continue with economic reforms despite improving prices. At the same time, it has sought to protect the most vulnerable members of the society from the adverse impact of these reforms by creating a so-called Citizen Account, which basically consists of cash handouts to lower-income families.
When the 2014 price collapse began to take its toll on the oil-dependent Saudi economy, the government was forced to introduce austerity measures, including a cut in the remuneration of its public servants, who constitute a substantial portion of the workforce. As soon as prices began to improve, these measures were reversed to avoid growth in disgruntlement.
In the last quarter, the latest figures showed, public spending rose by 21 percent to US$61.5 billion (230.55 billion riyals), with public debt rising to US$146.6 billion (549.5 billion riyals) at the end of September from US$118.24 billion (443.3 billion riyals) at the end of 2017.
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.