Saudi Arabia expects 480 million riyal oil revenue

Muscat: Saudi government’s budgeted oil revenue at 480 billion Saudi riyals was estimated at an oil price of $50.1 per barrel next year, according to a report released by Global Investment House.
Also, to breakeven in fiscal balance, the Kingdom needs an average oil price of $70.8 per barrel.
In 2017, the government targets a budget deficit at 198 billion Saudi riyal (estimated at 7.7 per cent of gross domestic product), implying 33 per cent and 39 per cent reduction compared with the actual and budgeted numbers for 2016, respectively.
Saudi Arabia projected total revenue at 692 billion riyals (higher by 31 per cent than actual and 35 per cent compared to the budget in 2016). For 2017, total expenditure is projected at 890 billion riyals and the focus was on avoiding huge increases in spending and ensuring an emphasis on financial control. The 2017 budget, announced on December 22, 2016, was prepared in light of advances in the global and local economy.
The Kingdom also announced various measures to boost non-oil revenues including the introduction of visa taxes on non-Saudi workers and an increase in tobacco and sugar taxes. Also, Saudi Arabia reiterated its intention to implement VAT starting 2018 to boost revenues. However, contrary to rumours, the government categorically denied plans to introduce income tax in the Kingdom.
KSA aims to achieve a balanced budget in 2020 by implementing various measures, including increasing non-oil revenue, benefiting from efficiency savings on expenditure and ensuring greater fiscal discipline. Additionally, the government reiterated its intention to cap debt level at 30 per cent of GDP and finance the deficit by debt issuance from both international and local markets. As of December 2016, the government’s debt levels reached 12.3 per cent of GDP, with international borrowings comprising a third of the total debt. In addition to the local bonds issue, an international syndicated loan of 37.5 billion riyals ($10 billion) was borrowed from global investment institutions. The most noteworthy achievement in fiscal year 2016 was the completion of the first issuance of US-denominated international bonds in global markets, with $17.5 billion, the largest US-dollar-denominated sovereign bond in emerging markets. The government aims to continue to fund the deficit via a combination of borrowings and internal reserves.
While the budget did not announce an immediate increase in the fuel prices, reforms in domestic energy prices will be gradual and linked to international markets from 2017 to 2020. Also, any such escalation is expected to be complemented by the introduction of direct cash transfers to needy citizens.
Expenditure for 2016 was less than initially projected due to the implementation of measures to reduce spending.