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 specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
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Results:
6.30pm: Al Maktoum Challenge Round-2 (PA) | Group 1 US$75,000 (Dirt) | 2,200 metres
Winner: Goshawke, Fernando Jara (jockey), Ali Rashid Al Raihe (trainer)
7.05pm: UAE 1000 Guineas (TB) | Listed $250,000 (D) | 1,600m
Winner: Silva, Oisin Murphy, Pia Brendt
7.40pm: Meydan Classic Trial (TB) | Conditions $100,000 (Turf) | 1,400m
Winner: Golden Jaguar, Connor Beasley, Ahmad bin Harmash
8.15pm: Al Shindagha Sprint (TB) | Group 3 $200,000 (D) | 1,200m
Winner: Drafted, Pat Dobbs, Doug Watson
8.50pm: Handicap (TB) | $175,000 (D) | 1,600m
Winner: Capezzano, Mickael Barzalona, Sandeep Jadhav
9.25pm: Handicap (TB) | $175,000 (T) | 2,000m
Winner: Oasis Charm, William Buick, Charlie Appleby
10pm: Handicap (TB) | $135,000 (T) | 1,600m
Winner: Escalator, Christopher Hayes, Charlie Fellowes
UAE currency: the story behind the money in your pockets
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Specs
Engine: 51.5kW electric motor
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Engine: Dual-motor all-wheel-drive electric
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New UK refugee system
- A new “core protection” for refugees moving from permanent to a more basic, temporary protection
- Shortened leave to remain - refugees will receive 30 months instead of five years
- A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
- To encourage refugees to integrate the government will encourage them to out of the core protection route wherever possible.
- Under core protection there will be no automatic right to family reunion
- Refugees will have a reduced right to public funds
The specs: Audi e-tron
Price, base: From Dh325,000 (estimate)
Engine: Twin electric motors and 95kWh battery pack
Transmission: Single-speed auto
Power: 408hp
Torque: 664Nm
Range: 400 kilometres
Guns N’ Roses’s last gig before Abu Dhabi was in Hong Kong on November 21. We were there – and here’s what they played, and in what order. You were warned.
- It’s So Easy
- Mr Brownstone
- Chinese Democracy
- Welcome to the Jungle
- Double Talkin’ Jive
- Better
- Estranged
- Live and Let Die (Wings cover)
- Slither (Velvet Revolver cover)
- Rocket Queen
- You Could Be Mine
- Shadow of Your Love
- Attitude (Misfits cover)
- Civil War
- Coma
- Love Theme from The Godfather (movie cover)
- Sweet Child O’ Mine
- Wichita Lineman (Jimmy Webb cover)
- Wish You Were Here (instrumental Pink Floyd cover)
- November Rain
- Black Hole Sun (Soundgarden cover)
- Knockin’ on Heaven’s Door (Bob Dylan cover)
- Nightrain
Encore:
- Patience
- Don’t Cry
- The Seeker (The Who cover)
- Paradise City
Schedule:
Friday, January 12: Six fourball matches
Saturday, January 13: Six foursome (alternate shot) matches
Sunday, January 14: 12 singles
