Saudi Arabia's 11 Trillion Won Fiscal Deficit in Q1... Impact of Low Oil Prices and COVID-19

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Saudi Arabia announced on the 29th (local time) that its government fiscal revenue for the first quarter of this year reached 196.2 billion riyals (approximately 62.2 trillion KRW), according to the Saudi Ministry of Finance. This represents a 22% decrease compared to the same period last year.

Meanwhile, during the same period, Saudi Arabia's government fiscal expenditure was 226.2 billion riyals (approximately 73.3 trillion KRW), resulting in a fiscal deficit of 34.1 billion riyals (approximately 11.1 trillion KRW).

Oil sector revenue, which accounted for 67% of the Saudi government’s fiscal revenue in the first quarter, was 128.8 billion riyals (approximately 41.7 trillion KRW), down 24% from the same period last year. Non-oil sector revenue also fell by 17% compared to the first quarter of last year.

Saudi Arabia’s fiscal deficit in the first quarter is interpreted as being influenced by the global economic downturn and the plunge in oil prices caused by the COVID-19 pandemic.

Previously, in December last year, the Saudi government had set a deficit budget for the 2020 fiscal year with revenues of 833 billion riyals (approximately 270 trillion KRW) and expenditures of 1.02 trillion riyals (approximately 330 trillion KRW), resulting in a deficit of about 60.6 trillion KRW.

To cover the fiscal deficit and raise funds necessary for the COVID-19 crisis, Saudi Arabia issued dollar-denominated medium- and long-term bonds worth 7 billion USD (approximately 8.6 trillion KRW) on the 15th of this month.

The Saudi Ministry of Finance plans to use 32 billion USD (approximately 39 trillion KRW) from its foreign currency reserves this year to prepare for the fiscal deficit.

According to Bloomberg, Saudi Arabia’s foreign currency reserves in March decreased by 27 billion USD (approximately 33 trillion KRW) to an estimated 464 billion USD (approximately 565 trillion KRW). This is the lowest level in nine years since 2011.

This content was produced with the assistance of AI translation services.