Saudi fiscal deficit to reach 7 per cent of GDP in 2019
Saturday, 05 25 2019, Category: Economy, Country: Saudi Arabia
Higher public spending will push Saudi Arabia’s budget deficit to 7 per cent of gross domestic product (GDP) this year, the International Monetary Fund (IMF) said, a forecast well above the government’s own projection.
The IMF’s forecast assumes that Saudi oil output will average 10.2 million barrels a day and oil prices will average $65.5 a barrel in 2019, it said in a statement after a staff visit to the kingdom. The IMF said the fiscal deficit was 5.9 per cent in 2018.
The government has forecast a budget deficit of 4.2 per cent of GDP this year.
Minister of Finance Mohammed al-Jadaan said in a statement the IMF view shows the government’s progress in implementing economic and structural reforms, as first-quarter budget data showed.
The Kingdom of Saudi Arabia (KSA) recorded a budget surplus of 27.8 billion riyals ($7.4 billion) in the January-March period, its first surplus since 2014.
The IMF said the introduction of a value-added tax has been successful, but the government should consider raising it from 5%, which is low by global standards, in consultation with other Gulf governments.
A reduction in the government wage bill, a more measured increase in capital spending, and better targeting of social benefits will all yield savings, it said.