BEIRUT, CAIRO

Saudi Arabia’s non-oil revenue climbed 63 per cent in the first quarter of 2018, propelled by improved tax collection as part of a drive to reduce the economy’s reliance on income from oil exports.

Revenue rose to 52.3 billion riyals ($14 billion), partly due to the introduction of value-added taxation and measures taken over the past two years, including a levy on expatriates working in the world’s biggest oil exporter, the Finance Ministry said on Monday. The collection of zakat, an Islamic tax, also “significantly improved,” it said.

Crown Prince Mohammad Bin Salman is spearheading a plan that seeks to prepare the Saudi economy for the post-oil era and shore up public finances. In addition to the VAT, the government has raised fuel and utility prices and briefly curtailed public-sector allowances. The reforms, however, have hurt economic growth, prompting authorities to boost planned spending for this year and push the timeline for balancing the budget to 2023 from 2019.

Oil revenue reached 114 billion riyals, a 2 per cent increase compared with the same period a year earlier. Spending rose 18 per cent in the first quarter from a year ago, to 200.6 billion riyals, in line with efforts to stimulate the economy, the ministry said.

Finance Minister Mohammed Al-Jadaan said first-quarter figures suggested measures to curb spending and diversify income sources were working.

The data show “rapid and significant progress in economic reform to help achieve the medium-term fiscal balance program goals for 2023,” he said.

The first-quarter budget deficit was 34.3 billions riyals, about 18 per cent of estimated annual shortfall, the ministry said.

Saudis say Opec isn’t targeting five-year oil inventory average

Tokyo: Saudi Arabia’s energy minister said bringing global oil inventories back to their five-year average isn’t the target of Opec’s output cuts, and the group is yet to accomplish its goal of stabilising markets.

The rolling five-year average of stockpiles is inflated by the glut that’s been around since 2014, Khalid Al Falih said in Tokyo on Monday. The objective of production curbs by the Organisation of Petroleum Exporting Countries is to bring equilibrium to the market, he said, adding that he’s concerned about lower investment leading to potential shortages in the future.

While the industry is in better shape than in 2016, “we certainly don’t feel we are where we need to be,” Al-Falih said. “We believe we are on our way to restoring energy stability to the markets.”

Opec, along with its allies such as Russia, seem determined to keep cutting production even after their campaign to rebalance world oil markets has all but eliminated surplus inventories and prices have reached the highest level since 2014. Saudi Arabia, the world’s biggest oil exporter, is urging fellow producers to keep output restrained to fulfil a new priority: encouraging companies around the world to invest more in future supply.

— Bloomberg