Saudi Arabia to close deficit gap
State revenues of OPEC’s top oil producer, Saudi Arabia, are set to surge in the current fiscal year by at least 30 percent over predicted budget figures due to high oil prices and output, a new report said on Wednesday.
The revenues, projected in the 2003 budget at $45.3 billion dollars are likely to end the year at $60 billion dollars, the Saudi British Bank said (SABB).
The report based its estimates on an average oil price of $23 a barrel for 2003 and an average daily crude oil production of well above eight million barrels.
The kingdom does not disclose figures on which it calculates, but economists believe the 2003 budget was based on an oil price of $17.5 a barrel and a production of less than eight million barrels daily.
Nonetheless Saudi Arabia, the world’s leading oil producer and exporter, was not expected to completely eliminate a projected 10.4-billion-dollar deficit for the year, according to the report.
Deficit estimates
It estimates public expenditures will increase by 10 percent to $61.3 billion from budget projections of $55.7 billion. This would leave a small deficit of $1.3 billion, the bank said.
Over half the budget is spent on public sector salaries.
Two earlier reports had expected the kingdom to end the current year in the black due to the sharp increase in revenues.
The Riyad Bank estimated the kingdom would boast a budget surplus of four billion dollars, provided expenditures remain without increase.
A third report by the National Commercial Bank expected the surplus to be around $13 billion – based on an average oil price at $24 and oil output at 8.7 million barrels per day.
SABB said Saudi crude oil price topped $30 a barrel in the first three months of 2003, but has declined since April when the US-British invasion of Iraq turned into occupation.
Saudi oil output however remained around 9.5 million barrels daily, well above its quota, before it was decreased to around 8.4 million barrels at the beginning of June following OPEC agreement.
Rare occurence
The kingdom, which derives more than 80 percent of revenues from oil, has boasted a budget surplus only once in the past 20 years – $6.7 billion in 2000 on a sharp rise in oil prices.
Last year, Saudi Arabia reduced a projected budget deficit of $5.6-billion to $12-billion on high oil prices.
Riyadh has a staggering public debt of more than $173 billion, almost entirely owed domestically to commercial banks and two public pension funds.