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Saudi Arabia's Ministry of Finance announced that four scenarios were prepared for 2022 revenue, as most research firms and financial institutions expect the Kingdom to continue witnessing recovery next year.
This rosy outlook for the Saudi economy is supported by the increasing number of vaccinated persons and ease of restrictions imposed worldwide due to COVID-19.
The outlook is also driven by the high consumption of goods and services, the ministry said, adding that demand for oil is expected to reach pre-pandemic levels in 2022 and oil prices will likely range between $65 and $90 per barrel.
"Uncertainty regarding the recovery and opening of the global economy persists for many reasons, among which are the reoccurrence of complete and partial shutdowns in a number of key economies, the persistence of the pandemic's repercussion for a longer period due to the new waves of COVID-19," the ministry said in 2022 budget statement.
This also includes the persistence of global supply chain challenges, the pressures resulting from the increase in inflation levels and the expectations of an increase in oil reserves, which exerts even more pressures on oil markets, the ministry added.
The following table illustrates the four scenarios of 2022 revenue:
|
Scenarios for 2022 Revenue |
|
|
Scenarios |
Details |
|
Structural Revenue Scenario |
It is not tied to the developments in global markets. This is the scenario that was the basis upon which the expenditure ceilings in the budget were determined in accordance with the Financial Sustainability Program. |
|
Baseline Scenario |
This scenario is based on the developments in global markets. This is the scenario used to estimate the revenue in the budget. |
|
Lowest Scenario |
A scenario that takes into consideration the achievement in lower revenue compared to the baseline scenario. |
|
Highest Scenario |
A scenario that takes into consideration the achievement in higher revenue compared to the baseline scenario. |
The ministry expects, through the structural revenue scenario, to record revenue and expenditures of SAR 903 billion and SAR 955 billion, respectively. Meanwhile, it forecasts, through the baseline scenario, to achieve revenue and expenditures of SAR 1.045 trillion and SAR 955 billion, respectively.
The following table indicates the ministry's forecasts through the four scenarios for 2022:
|
Forecasts Through 4 Scenarios for 2022 (SAR bln) |
|||
|
Scenarios |
Revenue |
Expenditure |
Surplus / Deficit |
|
Structural Revenue Scenario |
903 |
955 |
(52) |
|
Baseline Scenario |
1045 |
955 |
+90 |
|
Lowest Scenario |
991 |
955 |
+36 |
|
Highest Scenario |
1130 |
955 |
+175 |
"It is essential to reiterate that the expenditure ceiling for 2022 were prepared on the basis of structural revenue that do not take into consideration the future projections of global markets. Thus, the ceiling was maintained according to the medium-term expenditure planning" the ministry said.
It added that this aims to achieve the national objectives and build expenditure ceilings that are more stable through limiting physical spending, which is influenced by the volatility in oil prices, tying expenditure to structural revenue and establishing qualitative controls for the size of the annual growth of expenditures ceilings.
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