09/08/2018 07:40 AST

Saudi Arabia’s budget deficit narrowed to 7.36 billion Saudi riyals ($1.96 billion) in the second quarter from 34.3 billion riyals in the first quarter, the finance ministry said.

The kingdom, which is working on a number of economic reforms aimed at diversifying its oil-reliant economy, has forecast a deficit of 195 billion riyals or 7.3 per cent of gross domestic product (GDP) this year, down from 230 billion last year. It aims to balance its budget by 2023.

The deficit narrowed in the second quarter because of growth in revenues, the finance ministry said in a statement on its website on Wednesday. Total revenues in the second quarter reached 273.6 billion riyals, up 67 per cent from the same period last year.

Non-oil revenues reached 89.4 billion riyals, up 42 per cent year on year.

Oil revenues leapt 82 per cent year on year to 184.2 billion riyals, reflecting a recent rise in prices. In the first quarter of this year the comparable increase was only 2 per cent.

The minister of finance said in a statement on Wednesday that the fiscal figures reflect the improvement in the performance of public finance, which will lead us more towards continuing our reform plans.” Saudi Arabia, the world’s top oil exporter, does not disclose the oil price assumptions behind its budget. An International Monetary Fund official told Reuters earlier this year that the Gulf Arab state would need oil prices to average $85-87 a barrel this year to balance its state budget.

The kingdom’s GDP contracted last year for the first time since 2009, but the IMF forecasts real GDP growth to increase to 1.9 per cent in 2018, the fund said last month.

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