How secure is ºÚÁÏÉçÇø’s financial position as oil revenues decline? 
ºÚÁÏÉçÇø recently released its official financial results for the second quarter of 2023. The data shows that non-oil revenues have risen to $36 billion during this quarter, compared to $32 billion in the same period of 2022, a growth of approximately 13 percent.
Contrarily, the Kingdom’s oil revenues have decreased in both the second quarter and the first half of 2023 compared to the corresponding periods last year. In the second quarter of 2023, they dropped from $67 billion to $48 billion — a decline of 28 percent. Similarly, in the first half of 2023, they decreased 17 percent from $116 billion to $95 billion.
In the first half of this year, total revenue amounted to about $158.8 billion, compared to total expenses of about $161 billion, a budget deficit of $2.1 billion. This is due to the significant decrease in oil revenues coupled with the increase in total expenditure in both the second quarter and first half of 2023.
Despite the notable decrease in oil revenues compared to the first half of last year, I remain confident in the Saudi government’s ability to maintain a strong financial position.
That increase can be attributed to a rise in both operating and capital expenditure. Operating expenditure has risen by 8 percent — equivalent to $5.3 billion — while capital expenditure has increased by 21 percent, reaching $2 billion, in the second quarter of 2023.
The decline in oil revenues so far this year can be attributed to the government’s decision to voluntarily reduce crude oil production by 1 million barrels per day. This was done in an effort to stabilize global oil prices, and the decrease in those prices has also had a detrimental impact on Saudi’s oil revenues.
Despite the notable decrease in oil revenues compared to the first half of last year, I remain confident in the Saudi government’s ability to maintain a strong financial position. This is evident in its ongoing efforts to implement ambitious economic and financial programs aimed at supporting strategic projects, diversifying the economy by boosting non-oil revenues, and providing support to the private sector.
Additionally, the Kingdom benefits from robust financial reserves exceeding $400 billion and maintains a relatively low and sustainable level of public debt compared to other G20 countries.
• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz
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