Saudi Arabia’s budgeted fiscal surplus for 2013 could end the year nearly 30 times higher because of an expected surge in oil export earnings as a result of high prices, according to the Gulf kingdom’s largest bank.
The world’s dominant oil exporter projected revenue at SR829 billion in 2013 and expenditure at a record high of SR820 billion, with a surplus of SRnine billion.
The government is believed to have assumed an oil price of $70 for the budget but prices could average as high as $110 this year, National Commercial Bank (NCB) said in a study on the Saudi budget, sent to Emirates 24/7.
“Based on our forecast of oil prices at $110 a barrel, we project a fiscal surplus of SR277 billion or 9.5 per cent of GDP,” NCB said.
“ This will result in oil revenues of SR1,043.5 billion, representing a decrease of 8.5 per cent compared to actual oil revenues in 2012, which also takes into account a 3.7 per cent decline in export volume. Non -oil revenues are also expected to reach SR104 billion, 3.9 per cent above actual level in 2012.”
The report said it expected Riyadh to again exceed its budgeted spending this year, projecting a 6.1 per cent rise to SR870 billion.
Saudi Arabia, pumping just less than 10 million bpd in 2012, had forecast a small deficit last year but at the end of the year, it turned into a massive surplus of SR387 billion, the Kingdom’s second highest fiscal surplus after the record 2008 balance of SR581 billion.
NCB said strong oil prices would allow Saudi Arabia to record another large current account surplus albeit slightly lower than in 2012 and 2011. It forecast the surplus at around $144 billion this year against $179 billion in 2012 and $158 billion in 2011.
The report showed the large surpluses would sharply boost the country’s net foreign assets to an all time high of about $710 billion at the end of 2013, an increase of nearly $70 billion from 2012. The assets, controlled by the Saudi Arabian Monetary Agency (SAMA), central bank, had already gained over $100 billion through 2012.
Turning to the economy, it forecast real GDP to grow by around 3.4 per cent this year, far lower than the 6.8 per cent rate recorded in 2012 and 8.5 per cent in 2011.
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