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Saudi Revenues Jump 50% in 1st Half of 2022, with $36 Bn Surplus

The actual Saudi budget recorded a 49 percent growth in its performance for the half of 2022. (Asharq Al-Awsat)
The actual Saudi budget recorded a 49 percent growth in its performance for the half of 2022. (Asharq Al-Awsat)
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Saudi Revenues Jump 50% in 1st Half of 2022, with $36 Bn Surplus

The actual Saudi budget recorded a 49 percent growth in its performance for the half of 2022. (Asharq Al-Awsat)
The actual Saudi budget recorded a 49 percent growth in its performance for the half of 2022. (Asharq Al-Awsat)

In a performance that exceeded the targeted budget surplus for 2022, the Saudi Ministry of Finance disclosed on Thursday a record increase in revenues during the first half of this year, driven by a surge in oil prices and the fast growth of the non-oil sector.

Experts told Asharq Al-Awsat that energy prices and the non-oil sector were able to support Saudi Arabia’s general budget, thanks to the Kingdom’s diversification of revenue sources and the financial reforms it has been leading for years.

The recent figures confirm the strength of the Saudi economy, which has seen a remarkable growth, despite the recent successive crises, including the Covid-19 pandemic and the Russian-Ukrainian war, according to the experts.

The budget performance during the second quarter of 2022 witnessed revenues exceeding 370.3 billion riyals (USD98.7 billion) and expenditures amounting to 292.4 billion riyals (USD77.9 billion), with the budget recoding a surplus of more than 77.9 billion riyals (USD20.7 billion).

As for the actual performance of the Saudi budget for the half-year, the revenues recorded a surplus of 135.3 billion riyals (USD36 billion), with the volume of realized revenues reaching 648.3 billion riyals (USD172.8 billion), compared to expenses that exceeded 512.9 billion riyals (USD136.7 billion).

Oil revenues during the first half of 2022 amounted to 434 billion riyals (USD115 billion), registering an increase of 75 percent compared to the same period last year.

Non-oil revenues in the first half of this year amounted to 214.2 billion riyals (USD57.1 billion), compared to 204 billion riyals (USD54.4 billion) in the same period last year, recording an increase of 5 percent.

The mid-term budget, which was announced on Thursday, bore a very positive indicator about the performance of public finances in Saudi Arabia. The surpluses achieved during the first six months of 2022, which amounted to USD36 billion, exceeded all previous government estimates.

In this regard, Dr. Abdullah bin Rabeean, academic and economic advisor to Asharq Al-Awsat, said that the excellent performance of the Saudi general budget during the second quarter and the first half of 2022 was the result of the measures taken to reduce financial squandering.

He added that these figures came at a time when the global economy was undergoing multiple crises that impede growth.

The economic advisor further stressed that non-oil revenues saw a good increase of 5%, which confirms the Kingdom’s success in achieving economic reforms and diversifying the sources of income, in line with Vision 2030.

For his part, Economic Expert Ahmed Al-Shehri told Asharq Al-Awsat that the high budget surplus has emphasized the success of the financial reforms undertaken by the Saudi government, at a time when most countries were suffering from economic stagnation.

The government was able to achieve growth in its revenues, while it increased its actual expenditures by 10 percent during the first half of 2022, in order to implement its mega projects within the plans and programs of its Vision 2030, he added.

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S&P: Tadawul Plays Pivotal Role in Saudi Arabia’s Economic Transformation

People enter the Tadawul Tower at Saudi Arabia's King Abdullah Financial District in Riyadh (Asharq Al-Awsat) 
People enter the Tadawul Tower at Saudi Arabia's King Abdullah Financial District in Riyadh (Asharq Al-Awsat) 
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S&P: Tadawul Plays Pivotal Role in Saudi Arabia’s Economic Transformation

People enter the Tadawul Tower at Saudi Arabia's King Abdullah Financial District in Riyadh (Asharq Al-Awsat) 
People enter the Tadawul Tower at Saudi Arabia's King Abdullah Financial District in Riyadh (Asharq Al-Awsat) 

Standard & Poor's (S&P) affirmed on Tuesday that the Saudi Exchange, Tadawul, plays a pivotal role in the Kingdom’s economic transformation, serving as a strategic platform to attract capital to support Vision 2030 investments.

It also said that Tadawul has become a major platform for providing alternative sources of financing, by allowing the economy to diversify sources of funding and dependence on direct government funding.

According to a report issued by the credit agency on Wednesday, growth in equity markets will enable companies and financial institutions to allocate more capital toward investments while managing leverage.

It said Tadawul's market capitalization increased 463% to about $2.7 trillion as of Dec. 31, 2024, from about $483 billion at year-end 2014.

The agency showed that one of the key milestones was the IPO of state-owned national oil company, Saudi Aramco, in 2019, which raised $29.4 billion, significantly elevating Tadawul's market capitalization and global standing.

Between 2014 and 2024, it said Tadawul's main market hosted 91 IPOs for an aggregate offering value of about $65 billion, even excluding other listings such as Aramco's secondary offering of about $11.2 billion in July 2024.

As a result, the number of listed issuers on Tadawul's main market grew to 247 by year-end 2024 from 169 in 2014.

The rating agency noted that Tadawul now ranks as one of the largest exchanges among emerging markets, in terms of its market capitalization and is also the largest emerging equity market outside Asia.

Financing Vision 2030 Projects

These developments come at a time when the implementation of Vision 2030 speeds up in Saudi Arabia, estimated to cost more than $1 trillion.

The agency said Vision 2030 projects will require raising funds across several sectors.

“We project that the central government and the Public Investment Fund (PIF) will raise new debt of about $60 billion or 4.9% of GDP annually over 2025-2028,” it noted, adding that the government is also actively promoting investments from large corporates, especially government-related entities (GREs), aiming to channel 5 trillion Saudi riyals (approximately $1.3 trillion) into various sectors through the “Shareek” (partner) program.”

Largest Emerging Markets

According to S&P, Tadawul now ranks as one of the largest exchanges among emerging markets, in terms of its market capitalization and is also the largest emerging equity market outside Asia.

“However, despite strong growth over the past decade, we consider it to be still at an earlier stage of development relative to some major global markets,” it said.

The agency noted that as of year-end 2024, about 67% of the exchange's market capitalization came from Aramco's $1.8 trillion value, while the seven largest issuers represented more than 80%. Of these seven issuers, other than Al Rajhi, all are GREs.

It added that despite the IPOs of many private-sector companies, public-sector entities represent the bulk of new listings.

“These entities have generated about $44 billion of the estimated $65 billions of aggregate IPO value over the past decade,” the agency said.

“For example, in addition to Aramco, Ades Holding and ACWA undertook IPOs of $1.2 billion each; Tadawul raised $1 billion in its own offering, in addition to other public-sector entities,” it added.