Mohammed bin Salman relies on oil to plug Saudi Arabia’s ballooning deficit

Mohammed bin Salman relies on oil to plug Saudi Arabia’s ballooning deficit

Saudi Arabia’s state oil company will help plug the Gulf nation’s widening budget deficit after massively increasing its dividend payout despite falling revenues.

Saudi Aramco, the world’s largest oil producing company, on Monday said it would increase its payout to investors by 56pc to $29.4bn (£23bn).

Nearly $29bn will go directly to the government in a boost for Crown Prince Mohammed bin Salman, known as MBS, who has been battling a growing budget deficit.

The Saudi government announced last week that its quarterly deficit has leapt by 80pc to 5.3bn riyals (£1.1bn), following huge investment in efforts to diversify the economy away from fossil fuels.

MBS’s spending on diversification projects include the $500bn development of the Neom city, a futuristic project intended to boost tourism.

Riyadh’s continued reliance on oil revenues shows that MBS’s aim of making Saudi Arabia less dependent on fossil fuels remains a pipedream.

Aramco increased its payout to the state despite profits tumbling from last year’s record highs, hit by a combination of lower oil prices and major production cuts.

Net income in the three months to June fell to $30.1bn, down 38pc from $48.4bn a year earlier when the energy crisis sent oil prices soaring.

Saudi Aramco said it would make a quarterly