Saudi Arabia's efforts to raise non-oil revenue through economic reforms bore fruit during the second quarter of 2018 with a 42 percent gain compared to the same period last year.
Jadwa Investment said in a research note that most of these gains came from taxes on goods and services, which nearly tripled year-on-year, to SR29.7 billion. Saudi Arabia introduced a 5 percent VAT in January.
During the first six months of 2018, a total of SR52.3 billion had been raised via taxes on goods and services, which represents 62 percent of the budgeted SR85 billion for the whole of 2018 , Jadwa said.
It added that as a result of a rise in yearly revenue at a faster rate than expenditure, the fiscal deficit narrowed to SR7 billion in Q2, pushing the H1 2018 fiscal deficit to SR41.7 billion.
Looking ahead, Jadwa said it expects oil and non-oil revenue to continue rising at faster rate than expenses on a yearly basis.
That said, higher than budgeted government revenue will not result in higher government expenditure, but rather, it will contribute to lowering the fiscal deficit, Jadwa added.
Its research note also said that total government revenue rose to SR273 billion in Q2, up by 67 percent, or SR110 billion, year-on-year.
While non-oil revenue saw a rise of 42 percent year-on-year, government oil revenue rose by an even higher rate during the quarter, to a total of SR184 billion.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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