RIYADH: Saudi Arabia on Wednesday reported a first quarter budget deficit of $9.09 billion, as oil revenue was hit hard by a combination of sliding global prices, demand and a supply glut in the wake of the coronavirus crisis.
That reversed a first quarter surplus of around $7.4 billion in 2019.
The kingdom — which is trying to diversify its oil-dependent economy — has projected a deficit of $49.84 billion, or 6.4 percent of gross domestic product (GDP), this year, widening sharply from $131 billion last year.
Total revenues for the first quarter reached $51.19 billion, down 22 percent year-on-year, the finance ministry said in a statement on its website.
Oil revenues dropped 24 percent to $34.32 billion in the same period, mainly driven down by slumping global crude demand and prices as the coronavirus outbreak paralyzed large parts of the global economy.
The Organization of the Petroleum Exporting Countries and other large oil producers, including Russia, have agreed to cut output by almost 10 million barrels per day (bpd), or 10 percent of global oil production, in May-June, in an attempt to balance the market.
While the size of the output cuts is unprecedented, demand has fallen even more and storage for all unused oil is shrinking quickly as global measures to combat the pandemic have brought many economies to a virtual standstill.
Saudi Arabia, the world’s top oil exporter, has registered over 20,000 coronavirus cases as of Tuesday with 152 deaths.
The finance ministry said non-oil revenues was also down 17 percent to $16.87 63.3 billion in the period. Total expenditures reached $60.28 billion, rising 4 percent from a year ago.
Finance Minister Mohammed Al-Jadaan said last week he expects the pandemic to cause a slump in activity in the non-oil private sector this year.
Saudi Arabia does not disclose the oil price assumptions behind its budget.
An International Monetary Fund official had told Reuters last year that the Gulf Arab state would need oil prices to average $85-87 a barrel this year to balance its state budget.
The ministry said it would finance the budget deficit through local and international borrowing.
Jadaan said earlier this month that the kingdom could borrow around $26 billion more this year and will draw down up to $32 billion from its reserves to finance the government deficit.
He also said the government expected the COVID-19 crisis to last for a few more months but that it would have a limited impact on its first-quarter revenue.
ter reached SR192.072 billion, down 22% from the same period last year, the ministry said in a statement on its website.