OPEC giant Saudi Arabia will end the current year in the red with a budget deficit of $3.2 billion following only one year of surplus since 1982, an economic report said Tuesday, December 4. The Riyadh Bank in its quarterly review forecast revenues to drop from a projected $57.3 billion to $54.1 billion, while expenditures were expected to remain unchanged on $57.3 billion.
The kingdom had projected a balanced budget of $57.3 billion for 2001 on the basis of an oil price of around $22 a barrel and an average daily output of more than eight million barrels. The bank forecast that oil revenues will drop from the budget projections of $44 billion to $41.3 billion due to the decline in oil prices and repeated output cuts.
The Saudi Arabian Monetary Agency (SAMA), the kingdom's central bank, said last week the Saudi budget boasted an actual surplus of $6.1 billion in 2000, down from the projected surplus of $12 billion. This was the first surplus in oil-rich Saudi Arabia since 1982, and was due to a surge in oil revenues.
The report, prepared by Riyadh Bank's chief economist Zahid Khan and senior economist Abdulwahab Abu-Dahesh, estimated the average price for Saudi oil in 2001 to be around $22 a barrel. Average oil production was estimated at 7.8 million barrels a day, some six percent lower than last year's average of 8.3 million barrels. As a result of the oil market weakness, the report forecast that next year's government revenues would decline to $46.4 billion and that the government would cut expenditures to $53.3 billion, a drop of seven percent from 2001. This would leave a large deficit of $6.9 billion for 2002, the bank said.
The report forecast essentially flat real economic growth for 2001, just 0.2 percent in Gross Domestic Product (GDP), mainly due to a 5.4 percent drop in the oil GDP. But the bank expected that non-oil GDP would grow by three percent at the end of the current year.
In its annual report, SAMA said Saudi GDP, which surged 4.5 percent in 2000, was set for continued growth in 2001 despite lower oil prices and export revenues. SAMA also said the surplus in the balance of payments rose sharply from $400 million in 1999 to $14.3 billion in 2000, due to a 57.9 percent increase in oil revenues to $70.7 billion.
Non-oil revenues rose 13.9 percent from $5.8 billion to $6.6 billion, the report said, predicting that the balance of payments will again boast a surplus in 2001. — (AFP, Riyadh)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com )