It is no longer news that oil-rich Saudi Arabia reported its first budget surplus in nearly ten years on December 8, 2022, due to increased revenue boosted by higher oil prices.
According to reports, the 2022 surplus totalled 102 billion riyals ($27 billion), accounting for 2.6% of Saudi Arabia’s Gross Domestic Product (GDP).
Why Nigeria is not like Saudi Arabia
Following the news, some Nigerians took to social media to wonder why their country was not as productive as Saudi Arabia, despite the fact that both are oil-producing economies.
However, it is worth noting that Nigeria has 38 billion barrels of crude oil, while Saudi Arabia has 193 billion barrels as of 2021, according to Statista.
In a brief conversation, Kayode Oluwadare, an oil market analyst, told entrepreneurng that Saudi Arabia is the world’s second-largest oil producer. However, the kingdom has been able to capitalize on the high oil prices caused by the Russia-Ukraine war-related market disruptions.
He said;
For perspective, a single field in Saudi Arabia (though its largest), the Ghawar field produces 3.8 million BPD compared to Nigeria’s total production that even dropped below 1 million barrels per day (BPD) at some point in 2022.”
Also, Saudi’s large proven reserves enables the country to bring new oil production to the market compared to Nigeria that is struggling to increase its proven reserves due to falling investment in prospecting and exploration activities amidst other factors. It’s simply a game of numbers. The more oil you produce, the larger your revenue.
Oluwadare also said that transparency is one factor that has always worked out for Saudi Arabia, stating that Nigeria can learn from that quality.
He said;
The kingdom’s oil company, Saudi Aramco is one of the most transparent and efficient national oil companies in the world. Little wonder it was a sellout when a very small fraction of its shares was publicly traded in the world’s largest initial public offering (IPO) a few years ago.
As a result, the oil giant is able to fully declare the true value of its revenues, unlike the NNPC that lacks operational efficiency and financial discipline. Also, the scepter of petroleum subsidy still looms large over Nigeria’s ability to balance its budget before even thinking of budget surplus.
When a government’s revenue exceeds its expenditures, both capital and recurring, a budget surplus is created. In this case, Saudi Arabia has earned more revenue from oil and gas than was projected in the previous year.
In stark contrast to Saudi Arabia’s budget performance, the Federal Government reported a N5.33 trillion budget deficit between January and August 2022.
