Saudi 2016 budget deficit said to fall to SAR 231 bln

Saudi Arabia’s budget deficit for 2016 is expected to fall to SAR 231 billion, compared to SAR 367 billion last year and lower than government estimates of SAR 326 billion, Saudi Fransi Capital said on Wednesday.

The firm anticipated a rise in revenues to SAR 677 billion, compared to the government estimate of SAR 514 billion, due to the increase in oil prices in the last quarter.

The effect of changing fees will be reflected in full next year despite the increase in non-oil revenue during the fourth quarter of this year, Saudi Fransi added.

Meanwhile, expenditures are seen to drop 7 percent year-on-year (YoY) to SAR 908 billion in 2016, but higher than government expectations by 8 percent. This figure is expected to drop further to SAR 860 billion in 2017.

Accelerated spending during the last quarter of 2016 is due to disbursing delayed dues, which is expected to continue in 2017, the brokerage firm added.

Saudi Fransi also said it expects a new 20 percent rise in electricity tariff coupled with a 40 percent increase in fuel prices in order to maintain liquidity and wealth distribution.