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Prepared by Cornelius Fleischhaker, Padamja Khandelwal, Malin Hu, and Jimmy McHugh.
Non-oil revenues had increased from 9.3 percent of non-oil GDP in 2003 to 16 percent in 2008. More recently, the ratio has fallen to 10.2 percent in 2012.
State Revenue Law, Royal Decree No. M/68, dated 18/11/1431H.
This experience, when oil revenues were subdued for an extended period, underscores the magnitude of fiscal buffers available to the authorities. Should lower oil revenues result in a depletion of the current stock of foreign exchange reserves, the authorities could in principle return to capital markets.
This approach computes “structural oil revenues” on the basis of a “long-term oil price” and “long-term oil output”. Revenues that are in excess (below) the structural revenues are considered to be the cyclical or non-structural component of revenues. A structural balance of zero, which matches expenditures to structural revenues, builds up precautionary saving buffers in years when prices are above the long term price. For additional details, see “Macroeconomic Policy Frameworks for Resource-Rich Developing Countries”, IMF Policy Paper, 2012.