ECONOMY | Saudi Arabia Posts $29 Billion Deficit In Second Quarter As Oil Revenues Slump

RIYADH | SAUDI ARABIA – Saudi Arabia posted a deficit of 109.2 billion riyals ($29.12 billion) in the second quarter this year as low oil  prices hurt revenues, a finance ministry report published on Tuesday showed.

The coronavirus crisis has hurt the non-oil sectors of the world’s largest oil exporter this year, adding to the impact of historic price lows on the economy.

Second quarter oil revenues fell by 45% year-on-year to $25.5 billion. Total revenues dropped 49% to nearly $36 billion.

Total second-quarter expenditures dropped annually by 175 to around $65 billion, the report on quarterly budget performance showed, although spending increased when compared to Q1 by 7.5.

‘A pullback in spending is essential for containing the deficit’, said Monica Malik, chief economist at Abu Dhabi Commercial Bank. ‘The proactive stance of the government was already reflected in the austerity measures announced in April. However, these will dampen the recovery outlook’, she said.

Facing deep recession this year, Riyadh has introduced steps such as removing a cost-of-living allowance for state employee and tripling value-added tax to 15% to bolster stare revenues.

Economists have said this could restrict recovery as curbs aimed at reducing the spread of the coronavirus are lifted.

RESERVES

The IMF has estimated the economy could shrink by 6.8% this year, a figure Saudi officials have said was ‘pessimistic’.

Saudi Arabia, which in the first three month of 2020 posted a $9 billion deficit, has raised $12 billion in international markets so far this year and has borrowed 41.1 billion riyals ($10.96 billion) in the domestic market, the document showed.

Finance Minister Mohammed al-Jadaan said this month the kingdom plans to tap international debt investors at least once more this year.

In addition to borrowing, the government has used around $13 billion in government reserves in the second quarter to finance its deficit, budget data showed. That is largely within a $32 billion drawdowns limited targeted by the government this year.

Between March and April, however, the kingdom used $40 billion in foreign reserve to back overseas investments of its sovereign fund, the Public Investment Fund.


BREAKING NEWS | Trump Says Beirut Explosion Seems To Be ‘Bomb Of Some King’

MILAN | ITALY – President Donald Trump on Tuesday cast a massive explosion that killed dozens of people and wounded thousands in Lebanon’s capital, Beirut, as a possible attack and offered U.S. help. ‘The United States ready to assist Lebanon’, Trump said at a White House briefing. ‘We will be there to help. It looks … Continue reading BREAKING NEWS | Trump Says Beirut Explosion Seems To Be ‘Bomb Of Some King’

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MILAN | ITALY – President Donald Trump on Tuesday said he sent his sympathies to Lebanon for the dozens of people killed and thousands wounded in a massive explosion in Beirut, which he cast as an attack, and offered U.S. help. ‘The United States stands ready to assist Lebanon’, Trump said at a White House … Continue reading BREAKING NEWS | Trump Says U.S. Ready To Assist Lebanon After ‘Terrible Attack’

BREAKING NEWS | U.K. PM Johnson Offers Support To Beirut After Massive Blast

LONDON – Prime Minister Boris Johnson said Britain stood ready to provide any support it could to help Beirut after a massive explosion in the city’s port area killed 25 people and injured more than 2,500. ‘The pictures and videos from Beirut  tonight are shocking’, Johnson wrote on Twitter. ‘All of my thoughts and prayer … Continue reading BREAKING NEWS | U.K. PM Johnson Offers Support To Beirut After Massive Blast

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