Higher Oil Prices Shrink Saudi Deficit

Higher Oil Prices Shrink Saudi Deficit

Higher international oil prices helped Saudi Arabia shrink its budget deficit by 71% from the first quarter of 2016 to $6.9b as of end-March 2017, Oil Price reported. State revenues jumped by a similar rate, 72%, to $38.4b, with oil revenues surging by 115% to $29.9b.

According to Nasdaq, strengthening Saudi Arabia’s government finances has allowed the kingdom to stop drawing down its foreign assets. After oil prices plunged in mid-2014, driving the Saudi state budget deep into the red, the government began liquidating assets held abroad by the central bank to pay its bills.

However, the data released mid-May showed the government had financed its deficit in the first quarter of 2017 entirely with money from its current deposits at the central bank, rather than by selling more foreign assets.

As part of efforts to strengthen its economy, Riyadh will be listing 5% of state oil giant Aramco, which is currently hunting for foreign bourses.

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