Decline in Saudi Arabia’s budget deficit during the first quarter of this year relative to the fourth quarter of 2020 is mostly due to higher oil prices and a large seasonal drop in spending, said Moody’s.

“But there is also a material structural improvement in the non-oil fiscal balance when compared to the first quarter on 2020. This improvement reflects a significantly higher non-oil revenue of 39%, largely due to the tripling of the value added tax rate last July, and the 47% cut in capex, which is in line with this year’s approved budget,” said Alexander Perjessy, Vice-president, Senior Analyst at Moody’s.

“If oil prices average around $60/barrel in 2021, we would expect Saudi Arabia’s full-year deficit to narrow below 5% of GDP from 11.2% of GDP in 2020, helping to reverse some of last year’s increase in the government’s debt-to-GDP ratio,” he added. – TradeArabia News Service

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