Saudi Arabia's real oil GDP growth to contract in 2021: IMF

Dubai — Saudi Arabia's real oil GDP is projected to contract by 0.5% in 2021, compared with a contraction of 6.7% in 2020, given production levels agreed by the OPEC+ group, the International Monetary Fund said May 3.

Moreover, the country's oil GDP is expected to grow by 6.8% in 2022 as the current OPEC+ agreement is assumed to end as announced, the IMF said in its annual Article IV mission statement.

OPEC and its allies have agreed to ease production cuts, after ministers April 27 endorsed previously agreed plans to boost crude oil output from May. The alliance intends to pump some 2 million b/d more crude oil by July.

Saudi Arabia's breakeven price for 2021 is expected to be $76.20/b, down from $77.90/b in 2020. It is expected to fall further to $65.70/b in 2022, according to IMF data released in April.

The 2021 Saudi budget aims to substantially reduce the fiscal deficit. The deficit widened from 4.5% of GDP in 2019 to 11.3% of GDP in 2020, as oil revenues fell and spending needs increased, and it was comfortably financed by new borrowing and the drawdown of government deposits, the IMF said.

"IMF staff projects the fiscal deficit to decline to 4.2% of GDP this year, slightly lower than the budget forecast, and over the medium-term (by 2026) to move to broad balance given the outlook for the global oil market and the fiscal policy plans of the government," the fund said.