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Saudi budget deficit hits $11.7bn as oil output cut bites

Aramco's storage facility. Oil revenue reached SAR505.4bn in the first nine months of 2023, falling 24 percent year on year Aramco
Aramco made its biggest cut on the OSP in 13 months for February cargoes to a 27-month low amid competition from rival suppliers

Saudi Arabia’s budget deficit reached SAR 44 billion ($11.73 billion) in the first nine months of 2023 as oil revenue dropped sharply on lower prices and extended voluntarily cuts, the finance ministry said.

Revenue stood at SAR854.3 billion in the first nine months of 2023, down 14 percent year on year.

Oil revenue hit SAR505.4 billion, falling 24 percent year on year. On the other hand, non-oil revenue reached SAR 349 billion, rising 21 percent year on year.

In Q3, revenue stood at SAR258.5 billion, while expenditure reached SAR 294 billion.

Last month, the kingdom’s finance ministry said it expects to report budgetary deficits each year until 2026, adding that GDP is likely to rebound after taking a hit this year from extended oil production cuts.

Additionally, the World Bank has forecast that the Saudi economy will contract by 0.9 percent this year with a budget deficit of 2 percent of GDP – a slightly more hawkish assessment than the kingdom’s most recent estimations of an economic slowdown.

In its recent economic update, the World Bank ascribed its predicted “abrupt decrease” in Saudi economic activity – down from 2.9 percent seen in April – to what it called “subdued prices”.

The International Monetary Fund also trimmed Saudi Arabia’s GDP growth forecast for 2023 to 0.8 percent from its July estimates of 1.9 percent.

The downgrade reflected the kingdom’s ongoing oil policy of maintaining production cuts, including unilateral cuts and those in line with an agreement through Opec+.

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