Saudi Arabia's high spend in H2 to be offset by stronger revenues

Saudi Arabia is expected to see higher expenditure in the second half of 2018, driven by an increase in capex, but this will be offset by higher revenues, according to a report by Bahrain-based SICO.

Recently, in a pre-budget 2019 statement, Saudi Arabia had revised upwards its projections for its fiscal performance in 2018, increasing its revenue projection to SAR 882 billion compared to a budget expectation of SAR 783 billion. The Kingdom also raised its expenditure projection to SAR 1.03 trillion, compared to SAR 978 billion in its 2018 budget allocation.

This translates into a 14 percent increase in expenditure in H2 2018 compared to H1 2018, the report said, adding that the latest projection shows SAR 148 billion in deficit expected for 2018.

“Given that Saudi Arabia’s total revenues in H1 2018 reached SAR 440 billion while preliminary estimates point to an estimated FY18 revenue at SAR 882 billion, it effectively implies revenues in H2 2018 will reach SAR 442 billion, +1 percent compared to H1 2018,” it added.

Current expenditure in H1 2018 reached SAR 408 billion, accounting for 53 percent of the total budget allocation.

The SICO report noted that the Kingdom’s economic growth is picking up, with the private sector’s economic growth reaching 1.8 percent in Q2 2018.

However, economic challenges remain, particularly in terms of increasing the role of the private sector in economic growth.