Aramco dividend to push govt budget into additional surplus

Saudi Arabia's budget estimates have not been revised for 2023, but factoring in Aramco’s PLD the government surplus might reach SAR 56 billion despite the output cut, Al Rajhi Capital stated in a recent report.

"For 2023, we believe oil revenues could reach SAR 749 billion compared with earlier estimates of SAR 709 billion, led by Aramco’s recent hike in performance-linked dividend," the research firm said, adding that the government’s total revenues will be aided by PLD worth SAR 72 billion, especially in Q2 2023 and Q3 2023, which will be paid in the current fiscal year.

Non-oil revenues are expected to grow slightly above last year, supported by the traction in non-oil GDP growth. "We expect non-oil revenues to be a key growth driver and we believe the PLD to make the Saudi budget less sensitive to oil prices," Rajhi Capital said.

The government, according to the research firm's view, is in a position to exceed the current spending levels given the lower sensitivity to oil prices and will manage to maintain healthy reserve levels (SAR 410 million as of Q2 2023).

Besides, the debt/GDP of H1 2023 is lower than the average of emerging economies.

"We would like to reiterate that the government will continue to follow a conservative approach in terms of managing debt levels," the research firm said.