Saudi Arabia said on Sunday it expected to post its first budget surplus in nearly a decade next year, as it plans to restrict public spending despite a surge in oil prices that helped to refill state coffers hammered by the pandemic.
After an expected fiscal deficit of 2.7% of gross domestic product this year, Riyadh estimates it will achieve a surplus of 90 billion riyals ($23.99 billion), or 2.5% of GDP, next year - its first surplus since it went into a deficit after oil prices crashed in 2014.
"The surpluses will be used to increase government reserves, to meet the coronavirus pandemic needs, strengthen the Kingdom's financial position, and raise its capabilities to face global shocks and crises," Crown Prince Mohammed bin Salman was quoted as saying by Saudi state press agency SPA.
The Saudi cabinet approved the budget during a meeting on Sunday that was chaired by Custodian of the Two Holy Mosques King Salman bin Abdulaziz.
In address to the people, he stressed that the Kingdom was able to overcome the economic impact of the pandemic due to its approval of economic and financial reforms in line with Vision 2030.
"We aim to focus on the security and health of citizens and residents, human development and forging ahead towards growth and diversifying the economy," he added.
"We are determined to continue implementing economic initiatives and reforms to realize the targets of Saudi Vision 2030, developing the quality of life and the best utilization of available resources," he continued.
"The budget stresses our keenness on preserving and boosting our gains. I directed ministers and officials to effectively commit to implementing the items of the budget, as well as the programs, development and social projects," said King Salman.
The world's biggest oil exporter plans to spend 955 billion riyals next year, a nearly 6% expenditure cut year on year, according to a budget document.
Riyadh plans to reduce military spending next year by around 10% from its 2021 estimates, the budget showed.
Revenues jumped this year by almost 10% to 930 billion riyals from the budgeted 849 billion, driven by higher crude prices and oil production hikes as global energy demand recovered.
Next year, the Kingdom expects revenues of 1.045 trillion riyals.
"We are totally now decoupling the government expenditure from the revenue", Finance Minister Mohammed al-Jadaan told Reuters.
"We are telling our people and the private sector or economy at large that you can plan with predictability. Budget ceilings are going to continue in a stable way regardless of how the oil price or revenues are going to happen".
Saudi Arabia forecast 2.9% GDP growth this year followed by 7.4% growth in 2022, according to the budget.
Saudi Arabia plans more than $3 trillion in investment in the domestic economy by 2030.
