Saudi Arabia's medium-term fiscal outlook is brighter following Saudi Aramco's plans to start paying a performance-related dividend, likely from the first quarter of next year, Jadwa Investment has said.
The planned dividends could be worth an additional 2 per cent of gross domestic product to Saudi Arabia's government, according to a budget report by Jadwa on Wednesday.
Aramco this month said it expected such performance-linked dividends to be in the region of 50 per cent to 70 per cent of its annual free cash flow, net of the base dividend and other amounts, including external investments, to be determined with the annual results.
"The medium-term outlook for the fiscal finances has improved with Aramco’s announcement that it intends to start paying a performance-related dividend probably from Q1-24 onwards," Jadwa said in its report.
"The performance-related dividend has improved the 2024 outlook."
Jadwa's report comes after Saudi Arabia reported a budget deficit of 2.91 billion Saudi riyals ($770 million) for the first quarter of the year after spending on the kingdom's economic diversification projects increased.
Expenditure from January to March rose by 29 per cent annually to 283.85 billion riyals, driven by a 75 per cent yearly increase in capital expenditure and a 52 per cent rise in social benefit expenses.
Meanwhile, total revenue during the period grew by 1 per cent annually to 280.9 billion riyals as non-oil revenue rose by 9 per cent, year on year, to 102.3 billion riyals.
In the near term, Saudi government spending is forecast to be higher than Jadwa originally expected this year.
"If the first-quarter figure was annualised, then expenditure would be just 1.9 per cent over budget, but this is unrealistic given that the fourth quarter almost always shows a spike in spending," the report said.
Meanwhile, non-oil revenue is expected to show "decent growth", as ever-expanding consumption boosts tax receipts, it said.
Looking ahead at the kingdom's expected oil revenue, this will be affected by the estimated 500,000 barrels per day cut to Saudi production from this month as part of a broader Opec agreement, but Aramco's planned performance-related dividend has improved the outlook for next year, Jadwa said.
Media reports of plans to offload more Aramco stock could result in a "modest hit" to the central government’s future oil revenue, depending on the size of any divestment, the report said.
Bloomberg last week reported the kingdom has been working with several advisers to study the feasibility of a follow-on offering on the Riyadh exchange, the newswire said, citing sources.
"On the basis that any stock sale does not go ahead in 2023, a small fiscal deficit (of maybe a couple of percentage points of GDP) appears likely this year, but with a potential return to surplus in 2024," Jadwa said.
The biog
Job: Fitness entrepreneur, body-builder and trainer
Favourite superhero: Batman
Favourite quote: We must become the change we want to see, by Mahatma Gandhi.
Favourite car: Lamborghini
Results
Women finals: 48kg - Urantsetseg Munkhbat (MGL) bt Distria Krasniqi (KOS); 52kg - Odette Guiffrida (ITA) bt Majlinda Kelmendi (KOS); 57kg - Nora Gjakova (KOS) bt Anastasiia Konkina (Rus)
Men’s finals: 60kg - Amiran Papinashvili (GEO) bt Francisco Garrigos (ESP); 66kg - Vazha Margvelashvili (Geo) bt Yerlan Serikzhanov (KAZ)
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Read more about the coronavirus
Expo details
Expo 2020 Dubai will be the first World Expo to be held in the Middle East, Africa and South Asia
The world fair will run for six months from October 20, 2020 to April 10, 2021.
It is expected to attract 25 million visits
Some 70 per cent visitors are projected to come from outside the UAE, the largest proportion of international visitors in the 167-year history of World Expos.
More than 30,000 volunteers are required for Expo 2020
The site covers a total of 4.38 sqkm, including a 2 sqkm gated area
It is located adjacent to Al Maktoum International Airport in Dubai South
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
UAE currency: the story behind the money in your pockets
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%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%204-cylinder%202.0L%20TSI%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%3C%2Fstrong%3E%20Dual%20clutch%207-speed%0D%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20320HP%20%2F%20235kW%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20400Nm%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3Efrom%20%2449%2C709%20%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20now%3C%2Fp%3E%0A
THE SPECS
Cadillac XT6 2020 Premium Luxury
Engine: 3.6L V-6
Transmission: nine-speed automatic
Power: 310hp
Torque: 367Nm
Price: Dh280,000
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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South Korea
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THE BIO
BIO:
Born in RAK on December 9, 1983
Lives in Abu Dhabi with her family
She graduated from Emirates University in 2007 with a BA in architectural engineering
Her motto in life is her grandmother’s saying “That who created you will not have you get lost”
Her ambition is to spread UAE’s culture of love and acceptance through serving coffee, the country’s traditional coffee in particular.
West Indies v England ODI series:
West Indies squad: Jason Holder (c), Fabian Allen, Devendra Bishoo, Darren Bravo, Chris Gayle, Shimron Hetmyer, Shai Hope, Evin Lewis, Ashley Nurse, Keemo Paul, Nicholas Pooran, Rovman Powell, Kemar Roach, Oshane Thomas.
Fixtures:
1st ODI - February 20, Bridgetown
2nd ODI - February 22, Bridgetown
3rd ODI - February 25, St George's
4th ODI - February 27, St George's
5th ODI - March 2, Gros Islet
Mrs%20Chatterjee%20Vs%20Norway
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Ashima%20Chibber%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Rani%20Mukerji%2C%20Anirban%20Bhattacharya%20and%20Jim%20Sarbh%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202%2F5%3C%2Fp%3E%0A
The specs: Lamborghini Aventador SVJ
Price, base: Dh1,731,672
Engine: 6.5-litre V12
Gearbox: Seven-speed automatic
Power: 770hp @ 8,500rpm
Torque: 720Nm @ 6,750rpm
Fuel economy: 19.6L / 100km
