Saudi Arabia posts $15.3bn budget surplus in first quarter amid oil rally

Oil revenue surged 58 per cent to $49bn as crude prices increased during the period

Saudi Arabia's revenue jumped 36 per cent to reach 278bn riyals while spending rose 4 per cent to 220bn riyals. SPA
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Saudi Arabia posted a budget surplus of 57.49 billion Saudi riyals ($15.33bn) during the first quarter of this year as buoyant crude prices fuelled its income.

The world's leading oil exporter's revenue rose 36 per cent to 278bn riyals, while spending rose 4 per cent to 220bn riyals during the period, the Ministry of Finance said in a statement on Sunday.

Oil revenue surged 58 per cent to 183bn riyals as crude prices rallied in the first quarter, anticipating supply shocks amid the Ukraine-Russia conflict.

Both the Brent and West Texas Intermediate oil benchmarks have gained more than 60 per cent since last year as pandemic-related curbs ease across the world.

The war in Ukraine and the consequent sanctions against Russia, the world's second-largest energy exporter, have caused oil prices to surge as fears of a supply shock abound amid strong demand.

Brent is expected to average $100 a barrel this year, its highest level since 2013, because of Ukraine war-related trade and production disruptions, according to the World Bank.

"Saudi Arabia posted the highest quarterly surplus in over six years in first quarter of 2022 ... equivalent to 64 per cent of budgeted 91bn riyals surplus estimated in the draft budget," investment bank EFG Hermes said in a note on Monday.

Spending on wages was up 1.8 per cent annually while that on grants and subsidies dropped 88 per cent and 10 per cent, respectively. Capital expenditure fell 1 per cent to 15bn riyals during the period.

The modest growth in spending also showed "a notable spending discipline" by the government, the investment bank added.

"The ministry also did not take any financing or borrowing during the quarter from the current account, government reserves, or internal or external financing."

Saudi Arabia's non-oil revenue increased 7 per cent to reach 94.2bn riyals, the ministry said.

GCC economies are expected to grow at their fastest pace in more than a decade, beating emerging market peers this year, as higher oil prices boost their recovery from the coronavirus slowdown.

Gross domestic product in the six-member economic bloc will expand by 6.1 per cent in 2022 as rising oil production and robust non-oil sector activity add to the economic momentum, Japanese lender MUFG said in a report in February this year.

Saudi Arabia, the Arab world's largest economy, expects to post its first surplus in about a decade in 2022, Finance Minister Mohammed Al Jadaan said in December.

The kingdom's economy is forecast to expand 7.4 per cent this year, driven by higher oil revenue, a projected improvement in the country's non-oil gross domestic product, a continued economic recovery from the coronavirus pandemic and its efforts to diversify the economy.

Saudi Arabia forecasts a surplus of 90bn riyals, or 2.5 per cent of GDP, in 2022. The government also plans to contain public spending despite a surge in oil prices.

Updated: May 16, 2022, 9:02 AM