Saudi Arabia registered a budget deficit in the Q1 of the year as the government boosted spending on wages and economic diversification projects. The country had a shortage of 2.9 billion riyals ($770 million).
Government revenue increased in the first quarter, extended by higher non-oil gains, but outpaced by an almost 30 percent advancement in spending, the Finance Ministry expressed in a budget report published on Sunday.
A different statement from the official Saudi news agency, written by Bloomberg, stated the government maintains a high capacity to restart the expansionary fiscal policy and consider accelerating projects.
Oil revenues dropped to 179 billion riyals in the first three months of this year because of lower crude oil prices. Non-oil revenues advanced by nine percent. This is due to the growth in income tax, profit, and capital increases by 75 percent.
Although Saudi Arabia is projecting a budget surplus this year due to the rise in oil prices that helped its budget to return to balance for the first time in almost ten years in the previous year, some analysts predict a deficit.
More About The Q1 Budget Deficit for Saudi Arabia
The IMF predicts the Saudi kingdom will run a budget deficit of 1.1 percent of gross domestic product this year, in contrast to the government’s expectations for a second consecutive surplus that it last estimated at 16 billion riyals ($4.3 billion).
Preliminary data published by the State Bureau of Statistics on Sunday showed that Saudi Arabia’s economy grew at a slower pace in the first quarter of this year, at 3.9 percent, down from 5.5 percent in the previous quarter. Although the country’s economy grew at the fastest rate among the G20 nations last year, the oil sector expanded at its slowest rate in over a year.