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Industry News
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| Saudi budget surplus likely to cross $29.3 billion |
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Saudi Arabia’s budget surplus is expected to cross $29.3 billion (SR110 billion) this year, banking on surging oil prices, a report issued by the Saudi British Bank (SABB) said. The report said it expected the Kingdom’s revenues from oil exports to reach $112 billion (SR420 billion).
“Our forecast is for Saudi government revenues to reach $112 billion (SR420 billion), with a budget surplus of approximately $29.3 billion (SR110 billion). In the IQ2005, our estimates put oil exports revenue for Saudi Arabia at $28 billion (SR105 billion). If this continues throughout 2005, oil export revenues alone will reach $112 billion (SR420 billion),” the report said.
Last year, the Kingdom made a budget surplus of $26.13 billion (SR98 billion) reaping a windfall from record prices for its crude exports. In an official statement, the government said revenues in 2004 soared to $104.8 billion (SR393 billion), almost double the initial government projections, while spending was $78.66 billion (SR295 billion). More than $8 billion (SR30 billion) of last year’s surplus will go toward development projects.
Another $2.93 billion (SR11 billion) will be used to raise the capital of the Saudi Credit Bank and Saudi Real Estate Fund. “The remaining revenues will be allocated to settle part of the public debt,” the finance ministry said.
In its second quarter report, SABB based its oil revenue forecast on the US Energy Information Administration, which continues to predict WTI above $50 a barrel throughout 2005 and 2006, taking Saudi government revenues well in excess of $106 billion (SR400 billion) a year.
The report said that with Saudi oil production already averaging 9.5 million bpd in 2005, even a drop in output through the summer months in the Northern hemisphere, could still see overall Saudi production in 2005 averaging well above 9 million bpd.
The bank said rising oil revenues would have a “knock-on” effect for the non-oil private sector. It added that it would boost government spending and create a much higher consumer and business confidence. “It will also have substantial monetary effects assisting credit creation and greater liquidity,” it added. The report also highlighted growing foreign investment in the Kingdom.
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| 21 Aug 2005 - Back |
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