Kingdom's treasury achieves revenue boost, combats budget deficit with strong start to 2023

The Kingdom’s treasury is reporting a promising start to the new year, with both tax and non-tax revenues posting strong numbers, resulting in a significant reduction in the budget deficit.

According to the latest expenditures and resources bulletin, tax revenues for the month of February 2023 surged to approximately 40.5 billion dirhams, marking a notable increase of 11 percent from the same period in 2022.

The government has high hopes for the future, as the 2023 Finance Law predicts that tax revenues will hit an impressive 264.9 billion dirhams this year, representing the largest share of the total estimated income of 293.2 billion dirhams.

Corporate tax revenues were among the highlights of the tax revenue report, showing a remarkable year-on-year increase of 17.9 percent to reach 2.7 billion dirhams, up from 2.3 billion dirhams last year. Meanwhile, income tax posted a solid 8 percent increase to reach 10.2 billion dirhams, up from 9.5 billion dirhams in February 2022.

The government’s tax revenue sources were diverse, as even the tax levied on manufactured tobacco contributed significantly to the revenues, generating about 2.1 billion dirhams, an impressive 24.2 percent increase compared to last year. The government expects the tax to generate around 12.5 billion dirhams in total for the year.

In the non-tax revenue category, which includes monopoly revenues and contributions, January and February 2023 saw a 2.7 billion dirhams total, up from 2.2 billion dirhams in the same period last year.

Meanwhile, expenditures dropped by 3.9 percent to approximately 47.1 billion dirhams, down from 49 billion dirhams in February 2022. The largest decrease was in the clearing fund, which cost just 400 million dirhams in the first two months of the year, a significant decrease of 92.6 percent compared to the same period last year.

Notably, the clearing fund proved to be a significant cost driver last year, totaling over 40 billion dirhams due to the high prices of subsidized materials such as sugar and butane gas in the international market. However, the government expects the cost to fall to around 26.5 billion dirhams this year.