Saudi Arabia’s 2022 budget to see first surplus since 2013 at $24bn

Saudi Arabia’s 2022 budget to see first surplus since 2013 at $24bn
Saudi Finance Minister Mohammed Al-Jadaan. (SPA/File)
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Updated 13 December 2021

Saudi Arabia’s 2022 budget to see first surplus since 2013 at $24bn

Saudi Arabia’s 2022 budget to see first surplus since 2013 at $24bn
  • Kingdom’s economy forecast to grow by 7.5 percent amid plans to diversify income activity

RIYADH: Saudi Arabia expects a 2022 budget surplus of SR90 billion ($24 billion), the Saudi Press Agency reported, citing a Cabinet statement.

If achieved, this will be the first fiscal surplus since 2013. Total revenues for 2022 are estimated at SR1.05 trillion, while spending is estimated at SR955 billion — the lowest level since 2017.

The Kingdom’s economy is expected to grow by 7.5 percent. Revenues grew by 12.4 percent compared with estimated revenues in the 2021 fiscal year, while expenditures narrowed by 5.9 percent, the statement said, following a meeting chaired by King Salman.

The Kingdom’s budget surplus is projected to be 2.5 percent of gross domestic product in 2022.

In the pre-budget statement published in September, a SR52 billion deficit was predicted for 2022. The Ministry of Finance had then expected the deficit to be 1.6 percent of the GDP. Yesterday, the ministry of finance expected this to be a surplus.

As for 2021, total revenues are projected at SR930 billion while expendtures are set to be higher than next year, standing at SR1.02 trillion. The ministry kept its deficit estimates for 2021 unchanged from its pre-budget statement in September at SR85 billion.

The ministry had predicted a lower SR849 billion of revenues in last year’s budget statement while expenditures were also forecast at SR990 billion — less than this year’s estimated figure of SR1.02 trillion.

Revenues experienced an upswing due to the weakening of the pandemic’s adverse effects, as well as government support for the private sector. In addition, several non-oil initiatives were adopted by the Kingdom, the report said. This led to an 18.2 percent growth in non-oil revenues compared to 2020, after excluding some profits from government investments last year.

Oil revenues also underwent a boost as higher global demand pushed oil prices up.

Meanwhile, COVID-19 related issues attributed to expenditures being higher than budgeted. Increasing vaccination rates among the Kingdom’s citizens meant that health workers received more overtime compensation while the purchase of vaccines also partly led to the jump in expenditures.

The rise in zakat revenues corresponded to larger social spending by the government, according to the ministry.

Deficit as a percentage of GDP fell notably from 11.2 percent in 2020 to an expected 2.7 percent in 2021.

While public debt increased in value from SR854 billion last year to an estimated SR938 billion this year, its share of GDP declined from 32.5 percent to 29.2 percent. The statement explained that output is set to expand at a higher rate when compared to debt growth, inducing the decline in the latter figure.


Saudi Arabia’s US treasury holdings fall to a 5-year low

Saudi Arabia’s US treasury holdings fall to a 5-year low
Updated 13 sec ago

Saudi Arabia’s US treasury holdings fall to a 5-year low

Saudi Arabia’s US treasury holdings fall to a 5-year low

MOSCOW: Saudi Arabia's holding of US Treasuries decreased by $1.5 billion in November to hit $115 billion, the lowest level since January 2017.

The relatively marginal monthly drop followed a bigger decline of $7.8 billion recorded in October driven by a $6.8 billion decrease in short-term U.S. Treasury bills. The $1.5 billion slip experienced in November was driven mainly by the disposal of the long-term U.S. Treasuries from the country's portfolio.

In the group of other oil-exporters, it's worth noting that Norway continued its disposal of treasuries as its holding fell for the second month in row. The country's holding of US Treasuries fell by $4.8 billion in November to $100.2 billion after a much bigger drop of $15.8 billion in October.

The UAE also continued selling its treasury holdings, falling by $5 billion in November after a similar $5.1 billion drop in October. This represents quite a significant share of the country's total UST holding which fell to $48 billion in November from $58.7 billion in August.

In addition, Kuwait's holdings declined by $1 billion in November to $45 billion.

As for China, the world's second largest holder of US Treasuries, its holding grew in November by $15.4 billion to $1.08 trillion.

Japan, the number one holder, increased its US treasuries by $20.2 billion, the second consecutive monthly rise.

Globally, the total holding of US Treasuries by non-US residents increased by $88.8 billion to $7.75 trillion.


Will TASI wrap up two straight weeks of gains? Here’s what to know for Jan. 19

Will TASI wrap up two straight weeks of gains? Here’s what to know for Jan. 19
Updated 54 min 47 sec ago

Will TASI wrap up two straight weeks of gains? Here’s what to know for Jan. 19

Will TASI wrap up two straight weeks of gains? Here’s what to know for Jan. 19

RIYADH: Saudi Arabia’s main stock index was up for the eighth consecutive day on Tuesday as benchmark oil prices surged to record 7-year highs.  

TASI edged up 0.2 percent to close at 12,194 points, whereas the parallel Nomu market was down 0.5 percent to 26,058 points.

In the GCC region, Qatar’s QSI and Abu Dhabi’s FTSE ADX General index led the gains, both up 0.8 percent, followed by TASI.

Bourses of Dubai, Bahrain, and Kuwait edged down, while Oman’s MSX30 ended flat.

Elsewhere in the Middle East, the Egyptian index EGX30 closed 0.1 percent higher.

In energy trading, Brent crude jumped in early morning to its highest level in seven years, reaching $88.4, and US WTI crude oil traded at $86.5 per barrel as of 8:43 a.m. Saudi time.

Stock news

  • United Wire Factories Co. reported estimated 2021 profits at SR46 million ($12.3 million), down 26 percent from a year earlier
  • Red Sea International Co. has signed a SR60.5 million deal with The Red Sea Development Co., TRSDC, to design, manufacture, supply, and install three complexes in the Saudi Western region
  • Yamama Cement Co. is to sell its sixth production line which produces a capacity of 3,000 tons of clinker per day
  • Saudi oil giant Aramco signed one agreement and nine MoUs with leading Korean entities to advance its downstream strategy and support development of low-carbon energy solutions, while creating new financing options for the company

Calendar

Jan. 19, 2022

  • Allied Cooperative Insurance Group’s rump offering ends

Jan. 20, 2022

  • National Co. for Learning and Education will start paying out dividends of SR0.8 per share for the fiscal year ended Aug. 31, 2021

Jan. 25, 2022

  • Saudia Dairy and Foodstuff Co., SADAFCO, to pay cash dividends at SR3 per share for the first half of its fiscal y

 


Oil highest since 2014 as Turkey outage adds to tight supply outlook

Oil highest since 2014 as Turkey outage adds to tight supply outlook
Updated 54 min 15 sec ago

Oil highest since 2014 as Turkey outage adds to tight supply outlook

Oil highest since 2014 as Turkey outage adds to tight supply outlook


SINGAPORE:  Oil prices rose for a fourth day on Wednesday as an outage on a pipeline from Iraq to Turkey increased concerns about an already tight supply outlook amid worrisome geopolitical troubles in Russia and the United Arab Emirates.
Brent crude futures rose 87 cents, or 1 percent, to $88.38 a barrel at 0543 GMT, adding to a 1.2 percent jump in the previous session. The benchmark contract climbed to as much as $89.05, its highest since Oct. 13, 2014.
U.S. West Texas Intermediate crude futures climbed $1.03, or 1.2 percent, to $86.46 a barrel, adding to a 1.9 percent gain on Tuesday. WTI earlier jumped to a high of $87.08, its highest since Oct. 9, 2014.
Turkey's state pipeline operator said it put out a blaze following an explosion that cut oil flow at the Kirkuk-Ceyhan pipeline, adding that it would be operational "as soon as possible". The cause of the explosion is not known.
The pipeline carries crude out of Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries, to the Turkish port of Ceyhan for export.
The loss comes as analysts are forecasting tight oil supply in 2022, driven in part by demand holding up much better than expected as the highly contagious Omicron coronavirus variant spreads, with some predicting the return of $100 oil.
Concerns over Russia, the world's second-largest oil producer, and the UAE, OPEC's third-largest producer, are adding to the supply fears.
The UAE late on Tuesday called for a meeting of the United Nations Security Council to condemn an attack on Abu Dhabi on Monday by Yemen's Houthi movement, which has threatened further attacks.
Meanwhile, Russian troops are lined up on the border of Ukraine, with the White House calling the crisis extremely dangerous and saying Russia could invade at any point.
The tensions raise the prospect of supply disruptions at a time when OPEC, Russia and their allies, together called OPEC+, are already having difficulty meeting their agreed target to add 400,000 barrels per day of supply each month.
"OPEC+ is falling short of hitting their production quotas and if geopolitical tensions continue to heat up, Brent crude might not need much of a push to get to $100 a barrel," OANDA analyst Edward Moya said in a note.
Jet fuel consumption is rising with growth in international flights, while road traffic is much higher than the same time last year, Commonwealth Bank commodities analyst Vivek Dhar said in a note.
"OPEC+ supply constraints and the ongoing increase in global oil demand will likely keep oil prices well supported in coming months," Dhar said.
OPEC officials have told Reuters that oil's rally may continue in the next few months due to recovering demand and limited capacity in OPEC+, and prices could break $100 a barrel.


Saudi Arabia kicks off the year with a $755 million sukuk issuance

Saudi Arabia kicks off the year with a $755 million sukuk issuance
Updated 47 min 8 sec ago

Saudi Arabia kicks off the year with a $755 million sukuk issuance

Saudi Arabia kicks off the year with a $755 million sukuk issuance

RIYADH: The Saudi government offered sukuk denominated in Saudi riyals worth SR2.83 billion ($755 million) in its first issuance for the year 2022, the National Debt Management Center announced on Tuesday.

The issuance comes under the Kingdom’s riyal-denominated sukuk program.

The first tranche had a size of SR1.25 billion and matures in 2030 while the second tranche was valued at SR1.59 billion and matures in 2034.

Saudi Arabia collected a total amount of SR75.2 billion of sukuk in monthly issuances for the previous year.

The Saudi Finance Ministry established the sukuk program through the NDMC in July 2017.

Saudi public debt stood at SR948.3 billion at the end of this year’s third quarter, according to the ministry’s latest quarterly budget report. Domestic debt accounted for 59.1 percent while external debt made up 40.9 percent of the debt.

In its 2022 budget statement, the ministry predicted that public debt will reach SR938 billion next year.

 


Red Sea International to supply 3 complexes to TRSDC as construction accelerates

Red Sea International to supply 3 complexes to TRSDC as construction accelerates
Updated 19 January 2022

Red Sea International to supply 3 complexes to TRSDC as construction accelerates

Red Sea International to supply 3 complexes to TRSDC as construction accelerates

RIYADH: Red Sea International Co. signed a SR60.5 million ($16.12 million) contract with The Red Sea Development Co., known as TRSDC, to design, manufacture, supply, and install three complexes in the Saudi western region, according to a bourse filing.

This comes in line to support the construction activities of luxury hotels on three islands in the Red Sea, Sheybarah and Ummahat Al Shaikh islands.

The contract duration is 194 days, the company said in a statement to Saudi stock exchange, Tadawul.

The contract consists of various types of modular units, which can be used as accommodations or offices. These units will be fully furnished to provide all the requirements for the crew working on the construction site.

Revenues and profits will be realized starting the first quarter of 2022.

There are no related parties in the contract, the statement said.