Saudi Arabia’s non-oil revenues on track: BofAML

Saudi Arabia’s ongoing fiscal reforms and possible one-off revenues are keeping non-oil revenues on track, Bank of America Merrill Lynch’s (BofAML) Global Emerging Markets Weekly report noted on Sunday.

“Non-oil revenues stood at SAR 76 billion in Q1 2019, down 8.4 percent quarter-on-quarter (QoQ) but up 46 percent year-on-year (YoY),” BofAML’ MENA economist Jean-Michel Saliba noted in the report.

BofAML however expects the budgetary outcomes to deteriorate going forward, following the surprising Q1 2019 fiscal surplus.

“However, the likely ramp-up in budget expenditures and, in particular, off-budget capital spending after the completion of the Sabic-Aramco-PIF deal, suggest non-oil activity is likely to pick up going forward,” it added.

The report maintained Saudi Arabia’s mega-projects provide growth upside from 2020 onwards.

“We suggested that planned mega-projects could add up to 2 percent to real non-oil GDP growth in the medium-term,” BofAML report maintained.

“The possible finalization of the Saudi Aramco-SABIC-PIF deal could unlock $69.1 billion of financing to the PIF. This could support a first phase of mega-projects. Authorities suggest the transaction would close in 2020, implying the growth impact of PIF's off-budget capital spending could start to be felt next year,” it added.