Aramco may have to sell assets, borrow more to maintain Saudi dividend

Aramco may have to sell assets, borrow more to maintain Saudi dividend

Oil giant Aramco, whose dividend remains vital to helping Saudi Arabia contain a huge deficit, may have to sell assets and borrow more to fulfil its fiscal role amid uncertainty in oil prices, market specialists said.While Saudi Arabia has increased non-oil revenues this year, Aramco still accounted for more than half its total income, and will be key to containing a budget shortfall this year forecast at 298 billion riyals ($79.4 billion), or 12% of GDP.Though its profits plummeted this year as oil prices tumbled during the COVID-19 pandemic, the company is sticking to a promised $75 billion annual dividend that will go almost entirely to the government.While it is not obliged to maintain such a high payout, economists expect the firm to continue to offer the same support to state coffers next year."They can adjust the dividend to government lower, but they are more likely to maintain or increase the $75 billion and borrow if needs be," said James Reeve, chief economist at banking firm Samba Financial Group.Aramco declined to comment.With oil prices at $50 per barrel or above, Aramco should be able to fund the $75 billion dividend and capex from operating cash flows, said Dmitry Marinchenko,