Saudi Arabia posted a modest $2.2bn deficit over the first half of 2023 as lower oil prices greatly reduced oil revenues, leaving it well off the pace to achieve its budgeted $4.3bn surplus for 2023 as a whole. However, in a move which looks set to generate a significant surplus for the government this quarter, Aramco’s dividend distributions to shareholders will increase by nearly $10bn in Q3 (MEES, 11 August).
With the Saudi government the largest shareholder, this dividend-boost will ease external concerns over the government’s willingness to finance the giga-projects central to Saudi Arabia’s Vision 2030. Those concerns always seemed overstated given that Riyadh’s strong credit rating and low debt-to-GDP ratio of around 23% meant that it could afford to borrow significant sums to finance deficits. Moreover, if oil markets tighten and prices strengthen markedly in the second half of the year (MEES, 11 August), then any budgetary pressures will also ease significantly. (CONTINUED - 650 WORDS)