LONDON: Oil and VAT proceeds boosted Saudi state revenues by 15 percent to SR166.3 billion ($44.28 billion) in the first quarter.

The budget deficit stood at about SR34.3 billion, or about 18 percent of the total shortfall forecast for this year, the finance ministry said.

“The fiscal map looks healthier than anticipated,” said John Sfakianakis, director of economic research at Gulf Research Center.

“The deficit, if sustained at current levels, should by year-end be lower than forecasted. Revenues increased a bit due to higher oil prices but non-oil income is the biggest contributor. Expenses are higher due to higher compensation for civil servants and social benefits.”

Total state revenues rose 15 percent year on year, led by a near quadrupling of income from taxes on goods and services to SR22.7 billion, official figures showed, following the introduction of a 5 percent VAT at the beginning of the year.

Oil revenues meanwhile rose 2 percent to SR114 billion.

But expenditures for the period grew 18 percent year on year to SR200.6 billion, resulting in a deficit of SR34.3 billion for the quarter.

This implies a 31 percent deficit increase on the year ago period, according to calculations by Arab News using figures supplied by the Ministry.

Compensation of employees — accounting for over half of state expenditures — rose 20 percent year on year to SR112.9 billion during the quarter. Social benefits meanwhile nearly tripled to SR18.8 billion for the period.

King Salman in early January ordered a series of salary increases and bonuses for civil servants, military personnel, pensioners, students and social security beneficiaries, in a bid to lessen the impact of VAT and higher petrol prices on the population.

Saudi Finance Minister Mohammed Al-Jadaan, said: “The fiscal figures for the first quarter of this year reflect rapid and significant progress in economic reform to help achieve the medium-term Fiscal Balance Program (FBP) goals for 2023, particularly in light of the strong non-oil revenues growth, and the sustained pace of spending efficiency.”

“This year, we are seeking to distribute government spending in a balanced manner throughout the fiscal year and reduce seasonal expenditure, in order to boost economic growth rates and maximize the benefits.”