Fiscal results reflect Saudi Arabia’s insistence on economic reforms 
In the first quarter of the current financial year, Saudi Arabia recorded revenues amounting to $74.92 billion and expenditures amounting to $75.69 billion, reflecting a deficit of $0.77 billion.
The main reason for the improvement in total revenue is the increase in non-oil revenues by 9 percent ($2.16 billion) to reach 27.29 billion compared with $25.13 billion recorded in the same period last year.
However, oil revenues stood at $47.47 billion, reflecting a 3 percent drop ($1.33 billion) compared with the corresponding period in 2022.
The main reason behind the decrease in oil revenue is the drop in oil prices, as the average price of Brent crude during the first quarter of this year was about $81.10 per barrel compared with about $100.90 per barrel for the same period last year.
Total expenditures have increased by 29 percent ($16.9 billion) in the first quarter of 2023 compared with the same period last year.
This increase is due to the rise in operating expenses by 25 percent ($13.92 billion) and the increase in capital expenditures by 75 percent ($2.96 billion).
Other factors contributing to the increase in total expenditure include growing spending on government services provided to citizens and residents, infrastructure development and the improvement of social protection programs.
Despite the minor fiscal deficit revealed in the first quarter of 2023, the budget’s actual financial performance reflects the Kingdom’s healthy financial position and shows the government is taking the proper steps toward diversifying its economy and revenue base.
The government increased spending on the education sector in the first quarter of 2023 by 14 percent to reach $13.89 billion, and on the health and social development sector by 31 percent to reach $13.2 billion. This increase in essential public services proves the government is focusing on the social dimension as a priority to improve the level of education and health provided to the public.
Despite the increase in expenditures in the first quarter of this year compared with the same period last year, the government has shown great financial discipline in spending. Total disbursement during the first quarter of this year amounted to about 25 percent of the total estimated fiscal budget for the full year, which reflects the improvement in the financial planning mechanism. This booming financial planning mechanism has supported the government in paying its dues to the private sector on time.
Saudi Arabia’s real gross domestic product has grown by 3.9 percent on an annual basis in the first quarter of 2023 as non-oil activities have picked up pace, according to data released by the General Authority for Statistics.
Despite the minor fiscal deficit revealed in the first quarter of 2023, the budget’s actual financial performance reflects the Kingdom’s healthy financial position and shows the government is taking the proper steps toward diversifying its economy and revenue base.
This is proven by the noticeable improvement in non-oil revenues and the strong government reserves, as well as the size of the public debt, which is considered the lowest among the G20 countries at 24.6 percent of GDP as forecast for 2023.
• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz
