Saudi Arabia’s budget deficit has shrunk by 86 percent amid strong non-oil revenue growth, according to the figures for the second quarter of 2019 released by Saudi Minister of Finance Mohammed bin Abdullah al-Jadaan on Tuesday.
Saudi Arabia’s deficit for H1 2019 amounted to 5.7 billion riyals ($1.52 billion), compared to 41.7 billion riyals ($11.12 billion) for H1 2018.
Total revenues increased by 15 percent while total expenses increased by six percent, according to an abridged version of the report published by Saudi Arabia’s official press agency. Non-oil revenues increased by 14.4 percent for H1 2019, with the sector driven by improvements in economic activity and the implementation of reform initiatives.
VAT and fees from expats increased the tax revenues received on goods and services by 48 percent. Trade and international transactions increased by 10 percent as economic activity improved.
Subsidies have more than doubled for H1 2019, as authorities implemented a private sector stimulus plan. Social benefits and employee compensation also increased by three percent each. Capital expenditure increased 22 percent as a result of the implementation of various housing and development projects.
Saudi Arabia’s external and internal borrowing for H1 2019 amounted to 67.9 billion riyals, which will be used to finance an expected deficit until the end of 2019. As of June 2019 the debt balance amounted to 626 billion riyals.
The country recorded revenues of 260.71 billion riyals for Q2 2019, and expenditures of nearly 294.23 billion riyals. The budget deficit for this period was 33.52 billion riyals.
In a statement, al-Jadaan said that the government is in the process of balancing fiscal discipline and raising efficiency to realize the country’s financial targets for 2019. The targets will be achieved by controlling the deficit rates in the budget and public debt while simultaneously implementing projects, programs, and initiatives to speed up economic growth and improve Saudi citizens’ overall well-being.
The results for H1 2019 confirm the effectiveness of the government’s financial and structural reforms, said al-Jadaan. The minister drew attention to the increase of non-oil revenue as evidence of successful attempts to diversify government revenue sources.
The results also reflect progress in executing development projects in line with Saudi Vision 2030, he added.