Saudi spending continues despite oil revenue fall

OREANDA-NEWS. Saudi Arabia's oil export revenues will fall by 35.2pc from an estimated \$265.1bn in 2014 to \$171.8bn this year, Riyadh-based bank Samba said in its May report. The Saudi crude price is likely to drop to \$57/bl this year from an estimated \$95.7/bl in 2014, it said.

The bank forecasts an average price Brent crude price of \$61/bl this year. It expects Saudi output to average 9.8mn b/d in 2015, up slightly from an estimated 9.7mn b/d last year.

Saudi output hit an average 10.3mn b/d in March, and oil minister Ali Naimi has said it will remain at around 10mn b/d for the foreseeable future.

The bank expects Saudi crude to average \$64/bl in 2016, with Brent at an average of \$68/bl. It forecasts Saudi production at 9.7mn b/d next year, with oil export revenues rising slightly to \$182.1bn.

Samba forecasts a trade balance of \$69.8bn this year, compared with \$171.1bn in 2014.

The government is maintaining high spending despite the fall in oil export revenues this year. Its net holdings with the country's central bank fell by \$9.5bn in March as a result, "continuing a negative monthly change for the sixth consecutive month," Samba said.

High government spending is also eating into the country's foreign reserves, which fell to \$694bn in March from \$732bn at the end of last year.

Forecast government expenditure of \$290.91bn this year is only slightly below last year's level of \$293.31bn. Last year's budget deficit was \$14.4bn, with this likely to surge to \$105.8bn this year, Samba said.