Saudi Oil Revenues Greatly Exceed Estimates
The Saudi British Bank reported on October 18th that Saudi Arabia’s crude oil revenues could top 170 billion riyals ($45.3 billion) in 2000, shooting past the numbers estimated for total revenues in the 2000 budget.
The world largest oil exporter, Saudi Arabia derives three-quarters of its government revenues from oil. The estimated oil revenues of 170 billion riyals ($45.3 billion) are calculated using $26 a barrel as the average price for the year.
With total revenues expected to top 220 billion riyals ($58.7 billion) and spending forecast at current levels, the kingdom could end the year with a surplus of 35 billion riyals ($9.3 billion), according to the report.
It is likely that the government will allow for increased spending, bringing the surplus down to 15-20 billion riyals ($3.9-$5.3 billion).
The report also forecast slight growth in nominal gross domestic product (GDP) at over 10 percent, with real GDP expected to grow by at least 4 percent and real non-oil sector growth at nearly 4.2 percent.
The report indicated that the kingdom’s 2001 budget will be cautious, with spending at 200 billion riyals ($53.3 billion) and government revenue at 195 billion riyals ($51.9 billion).
The report suggests that actual government revenues for 2001 should be closer to 205 billion riyals ($54.7 billion), with government spending at 203-205 billion riyals ($54.2-$54.7 billion).
The report said that: “Higher oil revenues, greater government spending and/or less borrowing, combined with modest inflation should boost business confidence.
Foreign investment changes, privatization and moves toward World Trade Organization membership could all act as stimuli to greater private sector activity.” The kingdom is seeking to increase private sector growth in an effort to diversify its economy away from dependence on oil.