Strong oil prices will ally with high output to boost Saudi Arabia’s actual revenue by nearly 38 per cent above budget forecasts and the surge is expected to sharply widen the fiscal surplus, according to the Gulf Kingdom’s largest bank.
Buoyed by firm crude prices, the world’ dominant oil exporter and largest Arab economy has projected revenue at SR829 billion for 2013 and expenditure at a record high of SR820 billion, with a surplus of SRnine billion.
But actual revenue could leap by nearly 38 per cent to SR1,146.9 billion while actual spending could also grow to nearly SR870.1 billion, National Commercial Bank (NCB) said in a study sent to Emirates 24/7.
The study noted that Riyadh had assumed an average oil price of around $70 for the 2013 budget but that prices could end the year at over $100.
The Kingdom’s oil production is also expected to remain as high as 9.8 million barrels per day, slightly lower than in 2012, when it averaged 9.9 million bpd.
But it will be far higher than in previous years as output averaged about 9.3 million bpd in 2010-2011 and as low as 8.2 million bpd in 2009, when crude demand plunged in the wake of the 2008 global fiscal distress.
The report put the actual fiscal surplus at around SR276.8 billion, nearly 30 times the budgeted surplus and the fourth largest balance in Saudi Arabia’s fiscal history.
Saudi Arabia had forecast a small budget deficit in 2012 but at the end of the year, it turned into a massive surplus of SR387 billion, he country’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 $144.4 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 $709.8 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.
Its forecasts showed Saudi Arabia’s real GDP would 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.
The slowdown will be a result of a decline in the country’s oil output which will likely be offset by an expected 7.4 per cent growth in the non-hydrocarbon sector.
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