Saudi Arabia’s deficit decline for the first quarter was half the quarterly target of SAR 49.5 billion, Al Rajhi Capital said in a new report on the government’s fiscal position.
Government revenue increased to SAR 144 billion during the first quarter, while expenditure hit SAR 170 billion, implying a deficit of SAR 26 billion.
The decline in deficit was attributed to lower expenditure, which came well below the quarterly target of SAR 222.5 billion. The first-quarter revenue was only slightly lower than the projected target of SAR 170 billion.
“We believe the lower Q1 deficit leaves ample headroom for government spending to rise in the remainder of 2017. However, oil price continues to remain an important determinant of the level of government spending going forward,” the brokerage firm added.
Non-oil revenue accounted for only 18 percent of its annual target. Accordingly, the expected rise in non-oil revenue going forward would support higher government spending until the end of this year.
Local economy is seen growing, thanks to the expected increase in government spending along with the reversal of public sector employee allowances and bonuses.
Al Rajhi Capital added that it raised its estimates for oil price to $54.60 a barrel from previous $50.30 per barrel for achieving the government’s projected oil revenue of SAR 480 billion.
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