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Page added on May 2, 2018
Saudi Arabia needs oil at $85 a barrel to balance budget
While a new Moody’s Investors Services says that Saudi Arabia’s credit outlook is stable and buffered by a strong fiscal position, the International Monetary Fund’s regional director believes that that the kingdom needs oil prices to be at least $85 per barrel this year to be able to balance its budget.
In its annual credit analysis on Saudi Arabia, Moody’s noted that the kingdom’s credit strengths include a strong fiscal position, significant liquidity buffers and a sizable stock of oil reserves combined with low extraction costs.
Moody’s rates Saudi Arabia as A1 stable, an outlook it says reflects its view that risks to the kingdom’s risks are broadly balanced.
In the report, Moody’s noted that growth in oil revenues before 2014 gave the Saudi government an opportunity to build up a significant asset cushion and reduce debt.
While declining oil prices since 2014 have pushed the budget balance into deficit, its overall balance sheet remains robust, the report noted.
Additionally, the report predicted that overall GDP growth will remain below 2 percent between 2018 and 2022, compared to the 4.6 growth recorded between 2011 and 2016.
Moody’s also forecasts that the government debt burden will continue to increase as a share of GDP from 17.3 percent at the end of 2017, but will peak below 30 percent over the course of the next five years.
Based on the assumption that Brent oil prices will average $60 per barrel in 2018, Moody’s also predicts that the budget deficit will narrow to about 5.8 percent of GDP in 2018, and then to 5.2 percent in 2019.
On Wednesday, Jihad Azour, the International Monetary Fund’s director for the Middle East and Central Asia, said that Saudi Arabia will need oil prices to be between $85 and $87 a barrel this year to balance its budget, compared to a break-even oil price of $83 a barrel in 2017.
“I think the fact that we are currently witnessing a recovery globally and in the region, and the fact that the oil price is going up, shouldn’t at any point in time be considered as a way for them to relax efforts and to be complacent,” he is quoted as saying by Reuters.
The Saudi government has projected a budget deficit of $2 billion in 2018, which it plans to balance by 2023.
arabianbusiness
13 Comments on "Saudi Arabia needs oil at $85 a barrel to balance budget"
MASTERMIND on Wed, 2nd May 2018 8:42 am
We live in exciting times. It’s my belief that “you personally” will most likely die of starvation or conflict between 2020 to 2050. You will experience a collapse of human civilization, a 90% die-off of humans, a destruction of the ecosystem, a loss of access to mined and drilled resources, and a dark age from which your descendent’s will not reemerge.
If your kids survive to 2050 they will have been cannibals and will live like 17th century serfs — no electricity, no running water, no schools, no medicine, and life will be short, nasty, and brutish.
https://imgur.com/a/pYxKa
pwinters on Wed, 2nd May 2018 9:55 am
oh well…..it ain’t ez evolving a species
roccman on Wed, 2nd May 2018 10:00 am
well the ark of upnepishtim is the agenda – has been – it’s clear as day for those paying attention. buck up – we are the mob – only interested in saving our own skins – this is not a worthy pursuit.
"Lucifer" on Wed, 2nd May 2018 10:08 am
Nice one Mastermind. Your belief will get you a hell of a long way.
Sys1 on Wed, 2nd May 2018 10:29 am
I didn’t know the most anti-alcool country in the world built as a skyscraper a huge bottle opener for Allah.
rockman on Wed, 2nd May 2018 10:29 am
And since we should have at least one post addressing this thread here you go. For as long as I recall the KSA budget has always been based upon its revenue and not required expenditures. Which is why it had a huge surplus after oil prices suddenly surged. And why there were budgets exceeding revenue when oil prices suddenly fell.
A suggestion to editors: Perhaps every day we should have a post in this news section titled “Whatever the F*ck You Want to Talk About”. That should cut down on hijackings. LOL.
dave thompson on Wed, 2nd May 2018 10:45 am
What country is worried about balancing the budget?
Sissyfuss on Wed, 2nd May 2018 11:24 am
Don’t be a killjoy, Rocknroll. You know the participants on this site are much too busy ad homyning each other to stay on thread. This is the WWE of doom. Enjoy.
JuanP on Wed, 2nd May 2018 1:34 pm
I won’t let Rock distract us with comments related to the article. I will not be manipulated that way! LOL!
Instead, I will point out Uruguay is playing Russia in June at the coming Russia 2018 FIFA World Cup. Keep up the good work! Don’t let Rock make sense! LOL!
Dredd on Wed, 2nd May 2018 3:14 pm
That explains the gas price surge orchestrated by Oil-Qaeda.
Damien on Wed, 2nd May 2018 5:51 pm
Baby bison being flown to Siberia to save permafrost:
https://www.fastcompany.com/40561843/baby-bison-are-being-flow-to-siberia-to-try-to-save-the-permafrost
MASTERMIND on Wed, 2nd May 2018 6:18 pm
JaunP
You sure love your alpha male Putin…Why? Closet homosexual?
Cloggie on Thu, 3rd May 2018 10:36 pm
“Saudi Arabia needs oil at $85 a barrel to balance budget”
They are going to get it and so will Russia.
“What country is worried about balancing the budget?”
Those sad countries that can’t print themselves out of misery, as nobody in the world accepts the Saudi zlotty, or whatever it is they pay each other with (dried camel dung?)
“You sure love your alpha male Putin…Why? Closet homosexual?”
More likely because Putin makes (((folks like you))) look like fools.