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With the Saudi budget statement for the 2022 fiscal year set to be released shortly, two Saudi economists tell Arab News their forecasts for the Kingdom's fiscal performance.
A key difference is whether the Kingdom is projected to make a surplus or deficit.
“In my opinion, we might see a surplus in 2021 in the fiscal budget coming from the rise in oil prices and VAT revenues this year,” Mohammed Al Suwayed, CEO of Razeen Capital, told Arab News.
He explained that the full reopening of the economy will act as a “cushion” to any projected falls in oil sales in the fourth quarter when compared to the third.
However, Mohamed Ramady, an independent London-based economist, forecast similar views to those found in the ministry’s pre-budget statement, as he expected deficits of SR65 billion ($17.3 billion) and SR51 billion for 2021 and 2022, respectively.
Ramady explained that oil revenues will remain pivotal in the 2022 budget, with an estimated value of SR903 billion. He added that oil prices will average around $65-$73 per barrel, dropping from $84 experienced in this year’s fourth quarter.
Renewed uncertainties concerning the omicron variant might push oil prices down next year, he indicated.
As for other sources of revenues, Ramady said: “The VAT non-oil revenues have been a bedrock for the Saudi state, and the current 15 percent VAT rate is not expected to be reduced in 2022”.
“There will be a greater effort to raise non-oil revenues in 2022 from asset sales and privatization, especially in the water sector and grain silos, with the PIF becoming the major vehicle for domestic capital expenditure due to raising funds from PIF-owned asset sales, such as the recent additional successful 5 percent STC share sale,” he added.