Jadwa Investment indicated that Saudi Arabia's 2019 preliminary fiscal budget revised the country's fiscal indicators for the 2018-21 period. It said that the 2019 budget estimated the fiscal deficit at 5% of GDP in 2018 relative to 7.9% of GDP previously, and is targeting a deficit of 4.1% of GDP in 2019 compared to an earlier forecast of 5.9% of GDP. It noted that the government increased its revenue estimate from SAR783bn to SAR882bn, or 30.1% of GDP in 2018, and raised its target revenues for 2019 by SAR135bn to SAR978bn, or 31.2% of GDP. Further, Jadwa indicated that the 2019 preliminary budget earmarked higher spending, mostly due to the reinstatement of allowances and to cost of living increases in 2018. It anticipated the public-sector wage bill to account for up to 45% of total expenditures by 2020. It projected capital spending to rise by SAR33bn, or by 15% year-on-year, to SAR250bn in 2019. In addition, Jadwa indicated that the government revised upwards its public debt projections to SAR576bn or 20% of GDP in 2018 and to SAR848bn or 25% of GDP by 2021. It added that the 2021 debt ratio will be below the government's 30% of GDP limit. It said that the government's debt stock will increase by SAR102bn in 2019, of which about 50% will come from domestic sources amid ample domestic liquidity, and the remainder from international issuances. In parallel, it noted that the Ministry of Finance expected real GDP growth to average 2.25% annually in the 2018-21 period.
Source: Jadwa Investment