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Saudi Arabia's budget deficit falls to $9.21 billion due to oil and other revenues rising

Saudi Arabia's second-quarter budget deficit shrank to 34.534 billion Saudi riyals (9.21 billion dollars), a 41.1% decrease from the first quarter as revenues, including oil, rose.

The ministry reported that oil income increased by 1.28%, reaching 151.734 billion Riyals.

In the quarter from April to June, Saudi Arabia, the world's largest oil exporter, saw its total revenue rise by 14.4%, to 301.595 riyals. Of this, 149.861 riyals were derived from non-oil sectors, while spending on public services rose 4.28%, or 336.129 riyals, to be a quarterly increase of 4.28%.

Data from the Joint Organizations Data Initiative showed that the kingdom's oil output in May was the highest in three-months. The OPEC+ group, which includes OPEC, Russia, and other allies, began unwinding cuts of 2,17 million barrels a day (bpd), in April, with a boost in production of 138,000 bpd. This was followed by more increases in the recent months despite the falling price of oil.

The kingdom's first-quarter budget deficit increased significantly year-on year to $15.65bn from $3.30bn in the same period last year, due to a drop of 18% in oil revenues.

Saudi Arabia is expected to have a budget deficit of $27 billion in this year due to lower oil prices.

The country is still pushing ahead with a massive transformation programme called Vision 2030, which aims to diversify revenue sources and wean the economy off its dependency on oil.

The 12-day war between Israel and Iran, which began in June, increased geopolitical risks in the Gulf region and raised concerns about regional stability. This could threaten foreign investment and tourism to the Kingdom. However oil prices briefly rose by as much as 7% when the war broke out on June 14.

The International Monetary Fund increased its GDP growth forecast of Saudi Arabia for 2025 to 3.5% in June from 3%. This was partly due to the demand for government-led initiatives and the OPEC+ plan to gradually end oil production cuts.

The Saudi finance ministry released a statement that stated the country's public debt was 1.38 trillion riyals at the end of second quarter. $1 = 3.7511 Riyals (Reporting and writing by Yomna Alashray and Enas Ehab in Cairo; editing by Andrew Cawthorne, Susan Fenton and Nayera Abdallah)

(source: Reuters)