Saudi Arabia to see 'small' budget deficit this year

A surge in spending will ally with a sharp decline in oil export earnings to plunge Saudi Arabia into a fiscal deficit in 2009 for the first time in seven years but the shortfall will be easily managed, independent estimates showed yesterday.

As the actual shortfall could be as low as four per cent of the gross domestic product and the kingdom’s foreign assets are at their peak, it will constitute no problem to the world’s dominant oil power.

Figures by two Saudi institutions expected the 2009 budget to plunge back into a deficit, albeit smaller than has been projected mainly because of higher public expenditure and a steep drop in oil prices.

According to forecasts by the Riyadh-based Jadwa Investments, the shortfall could be about SR18 billion (Dh17.8bn), far lower than the SR65bn deficit assumed by the government for the 2009 fiscal year.

But other forecasts by the National Commercial Bank (NCB), Saudi Arabia’s largest bank by assets, the deficit could reach SR51bn.

Emirates Business 24/7