Saudi Arabia might see a contraction in fiscal budget deficit this year, according to Riyadh-based Jadwa Investment.
“The Ministry of Finance (MoF) recently outlined that the fiscal deficit is expected to hit -SR85 billion (or -2.7 percent of GDP) in full year 2021, although we expect it to be even lower, at around -SR67 billion (or -2.1 percent of GDP),” Jadwa said.
The Kingdom’s income from VAT contributed 70 percent of non-oil revenues during the third quarter of 2021. “Value added tax (VAT) revenue remains a key component of non-oil revenue,” Jadwa said.
Saudi Arabia registered a fiscal surplus amounting to SR6.7 billion ($1.78 billion) in the third quarter of 2021, with the year-to-third quarter deficit at -SR5.4 billion, MoF reprted last week.
“With Brent oil prices currently trading above $80 per barrel, there is a strong possibility that full year 2021 government oil revenue could surpass our current estimate of SR528 billion,” the investment bank said.