Saudi 2010 Budget Deficit To Narrow As Revenue Rises

Saudi Arabia’s budget deficit may narrow to about 0.5 percent of gross domestic product this year as revenue rises, Banque Saudi Fransi said.

The gap will probably be SR8.4bn ($2.2bn), John Sfakianakis, the bank’s chief economist, wrote in an e- mailed report on Sunday. Last year’s deficit was 86.6 billion riyals, or more than 10 percent of GDP, according to data from the Kingdom’s central bank. It was the first time Saudi Arabia, the world’s biggest oil supplier, had posted a deficit since 2002, according to the International Monetary Fund.

Government revenue may increase 25 percent this year to 639.6 billion riyals, Sfakianakis said. Still, higher spending will make it hard for the kingdom to return to budget surpluses this year or next “unless there is a decent turnaround in energy demand globally,” he said.

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