IMF: South Arabia Needs $80-85 Oil to Balance 2019 Budget

OPEC’s biggest producer Saudi Arabia would need oil prices at $80-85 per barrel in order to balance its 2019 budget, Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund has told Reuters.

Saudi Arabia’s officials, including Energy Minister Khalid al-Falih, do not discuss publicly ‘targeted oil prices’ or a desired level of oil prices that would be comfortable to the kingdom’s finances, but analysts and the IMF have estimates what oil price level would be enough to cover Saudi Arabia’s budget spending.

For this year, “if you take the (2019) budget as presented with everything remaining equal, a breakeven point would be around $80-85,” Azour said.

The oil price slump in the fourth quarter of 2018 has certainly affected the public finances of the biggest oil exporting nations, including OPEC’s biggest, Saudi Arabia.

Although Azour does not see the price slump affecting the kingdom’s ability to finance itself, he expects that those lower prices would weigh on the fiscal position of Saudi Arabia.

For this year, the kingdom announced its highest-ever budget, of around $295 billion. This breaks the previous record set in 2018, with budget spending at $261 billion and it might spark concerns about the economy’s sustainability as the increase for 2019 includes a hefty bill for cost-of-living allowances introduced last year.

source: Financial Tribune