Goldman Sachs projected Saudi Arabia's fiscal deficit at SAR237.7bn, or 7.9% of GDP, in 2019, which would be much wider than the official target of SAR131bn, or 4.3% of GDP, mainly due to its expectation of lower-than-budgeted oil revenues. It forecast hydrocarbon revenues to decline by 8.5% to SAR555.3bn, or 18.4% of GDP, in 2019, while it said that the Kingdom's 2019 budget stipulates a 9% rise in oil receipts to SAR662bn, or about 22% of GDP. It noted that the authorities' budgeted revenues for 2019 take into account an oil price assumption of $79 per barrel (p/b), which is significantly higher than Goldman Sachs' oil price projection of $65 p/b. In parallel, it anticipated non-oil receipts to rise by 8.9% to SAR313bn, or 10.4% of GDP, in 2019. Overall, it projected Saudi Arabia's total revenues to decline by 2.9% to SAR868.3bn, or 28.8% of GDP, in 2019. Further, it pointed out that the Kingdom plans to raise spending by 7.4% to SAR1,106bn, or about 37% of GDP, in 2019, due to the extension of the 'cost of living' allowance that was introduced to compensate vulnerable Saudis for the rising energy prices and tax burden. It expected the fiscal deficit to further widen to SAR258.3bn, or 8.4% of GDP, by 2021 in case fiscal consolidation measures are delayed.

In parallel, Goldman Sachs considered that risks of further external debt issuance, domestic borrowing from local banks and a drawdown in reserves are significant and could adversely affect domestic liquidity. As such, it anticipated Saudi Arabia's public debt level to rise from an estimated 19.7% of GDP at the end of 2018 to 27.1% of GDP at end-2019 and 43.3% of GDP by the end of 2021, based on fiscal breakeven oil prices of about $90 p/b. It also forecast Saudi Arabia's fiscal reserves to decline from 21.4% of GDP at the end of 2018 to 20% of GDP at end-2019 and 18% of GDP by the end of 2021. In turn, it projected the Kingdom's net public debt position at 7.1% of GDP at the end of 2019 and 25.3% of GDP by the end of 2021, compared to a net asset position of 1.7% of GDP at the end of 2018.  
Source: Goldman Sachs