Saudi Reveals Optimistic 2019 Budget But Still Expects To Load Up On Debt

Saudi Arabia is sticking to its guns and plans a sizeable spending increase for 2019. The deficit is projected to fall slightly to around $35bn, but optimistic oil revenue assumptions could push it higher. Debt is forecast to reach 25% of GDP by 2021, still modest by regional standards.

Saudi Arabia released its 2019 budget this week and expects its annual deficit to edge down to $34.9bn. But this is based on oil revenues rising $14.7bn (6.9% in real terms adjusted for expected 2% 2019 inflation) over the course of the year. Such an expectation flies in the face of the prevailing oil market current outlook.

While MEES believes that Saudi Arabia can cut crude production deeper than its Opec pledge mandates and still record a slight annual production increase (see p4) this alone would be insufficient to generate such gains. And with oil prices exiting 2018 lower than they entered it, the outlook for 2019 is lower annual prices. (CONTINUED - 976 WORDS)

DATA INSIDE THIS ARTICLE

chart Saudi Budget Balance ($Bn): Projections Of A $35bn 2019 Deficit Are Based On An Optimistic Oil Price Outlook. Plug In $60/B And The Deficit Soars To $75bn
table SAUDI ARABIA'S FINANCES ($ BN)