Saudi Arabia recorded a deficit of 109.2 billion riyals ($29.12 billion) in the last quarter of this year, as weak oil damage revenues, a Ministry of Finance report released Tuesday showed.
The coronavirus crisis has hurt the non-oil sectors of the world’s largest oil exporter this year, adding to the effect of declining historical values on the economy.
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Oil revenues for the quarter at the time fell 45% year-on-year to $25.5 billion. Total revenue fell 49% to about $36 billion.
Total spending in the quarter of the moment fell 17% consistent with the year to about $65 billion, the quarterly budget functionality report showed, spending more than 7.5% compared to the first quarter.
“A decrease in spending will mean the deficit,” said Monica Malik, a leading economist at Abu Dhabi’s Commercial Bank. “The government’s proactive stance has already been reflected in the austerity measures announced in April. However, this will harm customers for recovery,” he said.
Faced with a deep recession this year, Riyadh has taken steps such as the abolition of a cost-of-living allowance for state workers and the triplement of the value-added tax to 15% to spice up government income.
Economists have said this may limit recovery as the brakes on the spread of cornavirus rise.
The IMF has estimated that the economy could shrink to 6.8% this year, a figure that Saudi officials described as “pessimistic.”
Saudi Arabia, which in the first 3 months of 2020 recorded a $9 billion deficit, has raised $12 billion in foreign markets, so this year it borrowed 41.1 billion riyals ($10.96 billion) from the domestic market, according to the document.
Finance Minister Mohammed al-Jadaan said this month that the kingdom plans to attract debt investors at least once more this year.
In addition to the loans, the government used about $13 billion in public reserves in the quarter to finance its deficit, according to budget data. This is largely within the government’s restriction of $32 billion restrict this year.
However, between March and April, the kingdom used $40 billion in foreign exchange reserves for foreign investment through its sovereign wealth fund, the Public Investment Fund.
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