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The oil giant of Saudi Arabia reports a 30% drop in payments to the state

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DUBAI, United Arab Emirates (AP) – Saudi-sponsored oil giant Aramco to pay 30% lower taxes to Saudi government in 2020

The Saudi Arabian Oil Company, the kingdom’s largest taxpayer, transferred $ 110 billion to the government in 2020, up from nearly $ 159 billion a year earlier. The Kingdom’s 2021 budget envisages spending $ 263 billion, showing the importance of Aramko’s payments to the state treasury.

The public figures of the state-controlled company give a strong insight into the financial health of the kingdom, which relies on the energy sector for 80% of its exports – two-thirds of its financial income. This is despite the ambitious efforts of Saudi Crown Prince Mohammed bin Salman to diversify the economy away from oil.

The company kept its promise to pay $ 75 billion in dividends for the year. The decline still occurred as its royalties and income taxes were more than halved. Almost all of the dividend money goes to the government of Saudi Arabia, which owns more than 98% of the company.

Amid the turmoil in the global energy markets unleashed by the viral epidemic on Sunday, Aramco announced on Sunday that its profits had fallen by about 44% to $ 49 billion in 2020. As the virus-induced blockade reduced demand for oil, the price of the Brent international base fell to an all-time low in April last year.

Despite the sharp losses of Aramco, the company managed to maintain its dividend on its shareholders by assuming a large amount of debt. Aramko’s net debt-to-equity ratio has doubled from 55% in 2020 to 26% in 2019.

Saudi Arabia-based Jadwa Investment estimates that the kingdom’s fiscal deficit will reach $ 79 billion by 2020, or 12% of gross domestic product, surpassing previous estimates. The budget deficit has been widening year by year since oil prices fell in 2014, prompting the government to borrow heavily to speed up oil production. The kingdom reduced some subsidies, increased the value added tax to 15% and accelerated the search for non-oil revenues.

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