Saudi Arabia posted a budget deficit in the third quarter that was almost seven times larger than in the previous three months, as the world’s biggest crude exporter endured a decline in both energy and non-oil income.

The government’s shortfall came in at 35.8 billion riyals (S$13.04 billion) in the three months ended in September, according to a budget report from the Ministry of Finance published late Wednesday (Nov 2). 

An 8 per cent decline in expenditure to about US$78 billion was outpaced by an almost 18 per cent decrease in revenues that were US$69 billion, largely due to lower receipts from oil and taxes. The quarterly deficit was more than twice as large as in the same period of 2022. 

Saudi Arabia’s US$1.1 trillion economy suffered its biggest contraction since 2020 during the third quarter, after the kingdom cut oil production in July in a bid to push up prices. Output is now around 9 million barrels a day, about 1 million below the average over the past decade, and expected to remain at similar levels until at least the end of this year.

Oil revenues declined 18 per cent to 147 billion riyals during July-September, according to the budget report. Income from non-oil decreased 17 per cent to 112 billion riyals.

The International Monetary Fund said last month Saudi Arabia would need crude close to US$86 per barrel to balance its budget, about US$5 more than the Washington-based lender had estimated in May. If outlays by the Saudi sovereign wealth fund are included, the breakeven will likely rise to $110 in the second half of this year, according to Bloomberg Economics. 

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Global benchmark Brent rose past US$85 a barrel on Thursday, after falling about 5 per cent over the previous three sessions

In October’s pre-budget statement, the Saudi Finance Ministry outlined plans to boost spending as part of Crown Prince Mohammed Salman’s programme to transform the economy. The latest blueprint now assumes fiscal shortfalls through at least 2026. BLOOMBERG