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Saudi Arabia to post ‘small’ fiscal surplus this year – broker

EFG-Hermes Holding on Sunday said in its latest forecast that Saudi Arabia
will post a 'small' fiscal surplus this year compared with an earlier forecast for a deficit.

''The strengthening in oil price will be extremely positive for the hydrocarbon-dependant GCC countries, which will see high oil revenues,'' the Cairo, Egypt-based investment bank said in a research report, according to Bloomberg.

''We have revised upward our GCC macro forecasts in line with the changes in our oil price forecasts,'' it added.
Saudi Arabia’s fiscal surplus will amount to about 0.6 percent of its gross domestic product this year compared with an earlier deficit forecast of 4.8 percent, EFG-Hermes said.

Meanwhile, Kuwait, Qatar and the UAE are all expected to post fiscal surpluses with crude prices averaging $50 a barrel this year.

The more upbeat tone from EFG-Hermes comes after it raised its forecast for benchmark Brent crude oil to $60 a barrel for 2009 and $70 a barrel for next year. Brent for September settlement closed at $73.59 a barrel on London’s ICE Futures Europe exchange on Aug. 7, according to Bloomberg data.

The kingdom’s economy is set to contract 0.9 percent this year after expanding 4.6 percent in 2008, according to the IMF's latest report. The government meanwhile is set to spend $400 billion over the next five years on infrastructure, jobs creation and a raft of other economic stimulus measures.

Despite the forecast of $70 oil Bahrain and Oman are expected to post a deficit this year, although EFG-Hermes says both states will be able to easily fund their deficits through a combination of debt financing and tapping into existing reserves.

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