Saudi budget surplus will exceed expectations in 2023: Bank BNP Paribas
A recent international report stated that the Kingdom of Saudi Arabia will achieve higher growth and a larger surplus in 2023 than it estimated in the preliminary data for the 2023 budget.
In its World Economic Outlook 2022/2029 report, French bank BNP Paribas says that the Kingdom is expected to achieve a surplus of 4.6% of GDP over the next year.
The French bank added that it estimated that the kingdom had set the initial budget for next year based on an oil price of $80 a barrel, which is lower than the forecast of BNP Paribas (EPA: BNPP) of $106 a barrel next year.
According to BNP Paribas oil price forecasts, Saudi Arabia is estimated to achieve an external fiscal surplus of $28.1 billion, or 2.7% of GDP in 2023, compared to official expectations of achieving a surplus of $2.4 billion, an increase of 1070%.
The French bank BNP Paribas expected growth next year to reach 3.4%, compared to the Kingdom’s estimates of 3.1% for growth, and a surplus of 0.2% of GDP.
The French bank said that every change of $ 5 per barrel in the price of oil will lead to a change in (the deficit or surplus) of the Kingdom by one percentage point.
The bank said that Saudi Arabia has increased its expected spending rates for the current and next years by 18% from previous estimates, which may indicate that the Kingdom is seeking to achieve the goals of Vision 2030 faster.
While it raised the estimates of growth rates for the current year to 8% from previous estimates, it lowered the expected growth rate for the next year to 3.1%, while reducing its estimates of the 2023 budget surplus by 90% compared to this year’s.
According to the preliminary statement of the Saudi budget for 2023, it indicates that the estimated surplus will amount to 9 billion riyals ($2.4 billion), which represents 0.2% of the Kingdom’s GDP.
While preliminary estimates issued by the Saudi Ministry of Finance indicate that the total revenues in 2023 will amount to about 1.123 trillion riyals, based on conservative estimates in anticipation of any developments that may occur in the local and global economy.
The French bank said the additional spending would be directed towards Vision 2030 projects, not on wages and welfare items.