Saudi state budget deficit shrinks nearly 10 pct in third quarter
(Recasts with details and analysis)
By Andrew Torchia
DUBAI, Nov 19 (Reuters) - Saudi Arabia's state budget
deficit shrank nearly 10 percent from a year earlier in the
third quarter of 2017, keeping the government on track to meet
its full-year target for strengthening its finances, official
data showed on Sunday.
Revenue climbed 11 percent to 142.1 billion riyals ($37.9
billion) in the quarter while spending increased 5 percent to
190.9 billion riyals. That left a deficit of 48.7 billion
riyals, down about 9.5 percent from a year ago.
The government is working to eliminate a deficit caused by
low oil prices, and until the gap can be closed, Riyadh is being
forced to borrow heavily and draw down its foreign reserves.
For the first nine months of this year, the deficit totalled
121.5 billion riyals, down 40 percent year-on-year. That
suggests the government is likely to achieve its target of a 198
billion riyal deficit this year, down from last year's actual
deficit of 297 billion riyals.
Non-oil revenue jumped 80 percent year-on-year to 47.8
billion riyals in the third quarter. The finance ministry said
this showed Riyadh's economic reforms, which aim to cut its
reliance on oil income, were feasible; among other steps, the
government imposed a tax on tobacco and sugary drinks in June.
But the success in cutting the deficit has come at a high
cost to the economy. Austerity measures pushed the economy into
recession in the second quarter of 2017, and have deterred the
private investment which the government needs to develop non-oil
As a result, sources briefed by finance ministry officials
told Reuters early this month that the government planned to
push back the target date for eliminating the deficit entirely
to 2023 from 2020.
The introduction of a 5 percent value-added tax is to go
ahead on schedule in January but some other revenue-raising
steps, such as domestic fuel price rises, are being delayed.
(Reporting by Andrew Torchia; Editing by Adrian Croft)
First Published: 2017-11-19 15:36:58
Updated 2017-11-19 20:17:45
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