Saudi Arabia has announced its budget for the fiscal year 2019. The budget for the year 2019 is the largest budget in the history of the Kingdom. In the year 2018, Suadi Arabia outperformed the budgeted revenue by 15% due to better than budgeted oil prices for the year 2018.
The way government machinery has tackled the issue is commendable. Under the guidance of King Salman, they are leading this beautiful country to a place where they don’t have to depend on oil exports heavily.
Actual 2018: Saudi Arabia’s actual expenditures for the year 2018 are SR 1030 billion ($275 billion) which is around 5.4% more than the budgeted expenditures.
Budget 2019: Saudi Arabia’s budgeted expenditure for the year 2019 is expected to be SR 1106 billion ($295 billion).
Expert Opinion on the Budget: It is a very positive step taken by the Saudi Government. If you know, the only solution to the current financial crisis is increased government spending. When the government is budgeting increased spending, it is a very positive sign for the Saudi economy.
Actual 2018: Saudi Arabia’s actual revenue for the year 2018 is expected to reach SR 895 billion ($185 billion) which is around 14% better than the budgeted revenue for the year 2018.
Budget 2019: Saudi Arabia’s Budgeted revenue for the year 2019 is SR 975 billion ($260 billion) with a 9% increase from the actual revenue of the preceding year.
Expert Opinion: The budget has been prepared expecting an average oil price of $80 per barrel whereas the current oil price is $57 per barrel. If the oil price does not improve in the near future, it would be difficult to generate this amount of revenue.
The expected revenue from dependents fee during the year 2019 is SR 45 billion ($12 billion). It is expected to increase to SR 65 billion ($17 billion) in the year 2020.
Actual 2018: Saudi Arabia’s actual deficit during the year 2017 was SR 230 billion ($61 billion) which has reduced to SR 136 billion ($36 billion) during the current year 2018 and according to the budget 2019, it is expected to further reduce to SR 195 billion ($53 billion).
Budget 2019: Saudi Arabia’s budgeted deficit for the year 2019 is 131 billion ($35 billion) which is 4% below the actual deficit for the year 2018.
The budget deficit has reduced to 4% of the GDP of Saudi Arabia. It is a remarkable achievement from the side of the government. According to the government projections, the budget deficit is expected to eliminate by the year 2023. It is the 6th consecutive year of the budget deficit for Saudi Arabia.
4-Gross Domestic Product:
Gross Domestic Product of Saudi Arabia is expected to reach SR 3.124 trillion during the year 2019 with an increase of 2.7%.
During the preceding 3 years, the government has financed the budget with its foreign currency reserves in addition to the borrowing of SR 200 billion ($53 billion) from the international market.
Saudi Arabia’s Foreign Reserves are expected to reach $496 billion by the end and would constitute 15.9 percent of the GDP.
6-The Amount of Debt
The volume of public debt reached 560 billion riyals, accounting for 19.1 percent of GDP, while reserves reached 523 billion riyals, representing 17.8 percent of GDP.
7-Income Taxes on Expats and Saudis
The Saudi Budget 2019 has not brought any change in the current tax law. It means that there will be no taxes on either expats or Saudis for the year 2019.
The Budget 2018 introduced a minimum dependent fee which has been imposed from July 2018. The expatriates are already paying a dependent fee of SR 200 per head per month. It will further increase to SR 300 per month per head from July 2019.
However, there are a few Categories of Expatriates who are exempt from Dependent’s Fee. It has also been suggested by the lawyers to the general public that the Dependent’s fee is the responsibility of the employers especially for those employees who have a family contract.
9-Work Permit Levy
Currently, every employer is paying SR 4,800 per annum per expatriate employee as work permit levy. The amount is expected to increase to SR 7,200 for the year 2019. We have already explained the Calculation of Work Permit Levy in detail.
It is also important to mention here that there are some expatriates who are exempt from Work Permit Levy. If your employer asks you to pay for the work permit levy, make sure to check the status of work permit levy before making the payment.