The data suggests that a long-promised injection of government cash is finally materialising as officials try to boost economic growth in the world’s largest oil exporter.
Wednesday 31, July 2019
Saudi Arabia’s budget deficit widened in the second quarter as officials ramp up spending to stimulate economic growth, reported Bloomberg.
The Finance Ministry said that the budget gap is SAR 33.5 billion ($8.9 billion) compared to SAR 7.4 billion in the same period last year.
Spending rose five per cent from the second quarter last year, with significant jumps in capital spending and outlays on subsidies and social benefits.
Additionally, oil revenue dropped five per cent year-on-year and non-oil revenue declined four per cent.
The Kingdom’s gross domestic product (GDP) is expected to grow 1.7 per cent this year, the second year of expansion after contracting 0.7 per cent in 2017.
Capital spending reached SAR 61 billion in Q2 2019, a 27 per cent annual increase that the finance ministry attributed to the implementation of housing projects and other development projects.
The ministry said that subsidy spending rose 71 per cent as the government provided support to SMEs.
Similarly, the finance ministry said that the decline in non-oil revenue—which has generally been rising since the government implemented a fiscal reform plan—was mostly due to a 37 per cent drop in other revenues, without giving more information.