Saudi sees fuller state coffers next year on surging oil prices

Global benchmark Brent crude this week topped $80 a barrel as global energy crunch takes hold.

Saudi Arabia has raised its revenue expectations for next year and plans to narrow its budget deficit to 1.6% of economic output as higher oil prices and production help the kingdom’s economy rebound from the pandemic.

Revenue is projected to reach 903 billion riyals in 2022, 4.5% higher than a forecast last year, the finance ministry said in a preliminary budget statement. Despite that, next year’s spending is expected to be the same as planned earlier, at 955 billion riyals. Meanwhile, this year’s budget deficit is expected to narrow to 85 billion riyals, or 2.7% of gross domestic product – significantly lower than the ministry’s target of 141 billion riyals.

The better-than-expected results for the world’s largest oil exporter are propelled by rising energy prices, with Brent crude hitting a nearly three-year high above $80 a barrel this week. The kingdom gets over half its revenue from oil, even as Crown Prince Mohammed bin Salman tries to diversify the kingdom’s economy into new sectors like tourism and manufacturing. Saudi Arabia’s oil production is also set to rise considerably next year, as the OPEC+ cartel eases cuts that started at the onset of the coronavirus pandemic.