Saudi 2012 Fiscal Surplus May Reach Record High
Strong oil prices could ally with high crude output to boost Saudi Arabia’s fiscal surplus this year to an all time high despite an expected surge in public expenditure, according to a Kuwaiti investment bank.
Global Investment House (GIH) gave three scenarios for the Saudi budget in 2012 ranging from worst to best but none of them included a deficit.
Even in the worst case, the world’s oil powerhouse could record an actual fiscal surplus of nearly 24 times the budgeted surplus, the report showed.
It forecast the surplus in the worst scenario at around SR294 billion in 2012 compared with a budgeted surplus of SR12 billion.
In the “most likely” case, the surplus could rocket to SR439 billion while in the “best” case, it could hit an all time high of SR797 billion, surpassing the previous record high surplus of SR580 billion in 2008.
Announcing its highest ever budget for 2012 just before the end of 2011, Saudi Arabia projected spending at SR690 billion and revenue at SR702 billion. The government gave no revenue breakdown but oil export earnings have accounted for more than 80 per cent of the total income in recent years.
The budget also did not include estimates for the 2012 average oil price and production but GIH said it expected the price of Saudi Arabia’s crude was assumed at about $52-58 a barrel and output at 8-9 million barrels per day.
“We believe, taking our clue from history (budget versus actual figures) and from conditions prevailing in the oil market, that both revenues and expenditure will be much higher than projected,” the report said.
“While we agree that Saudi Arabia will see a budget surplus in 2012, we expect the actual surplus to be substantially higher than the projections.”