By Marwa Rashad

RIYADH (Reuters) – Saudi Arabia on Wednesday reported a first quarter budget deficit of 34.107 billion Saudi riyals ($9.09 billion), as oil revenue was hit hard by a combination of sliding global prices, demand and a supply glut in the wake of the coronavirus crisis.

That reversed a first quarter surplus of around $7.4 billion in 2019.

The kingdom – which is trying to diversify its oil-dependent economy – has projected a deficit of 187 billion riyals, or 6.4 percent of gross domestic product (GDP), this year, widening sharply from 131 billion riyals last year.

Total revenues for the first quarter reached 192.072 billion riyals, down 22 pct percent year-on-year, the finance ministry said in a statement on its website.

Oil revenues dropped 24 percent to 128.771 billion riyals in the same period, mainly driven down by slumping global crude demand and prices as the coronavirus outbreak paralysed large parts of the global economy.

The Organization of the Petroleum Exporting Countries and other large oil producers, including Russia, have agreed to cut output by almost 10 million barrels per day (bpd), or 10% of global oil production, in May-June, in an attempt to balance the market.

While the size of the output cuts are unprecedented, demand has fallen even more and storage for all unused oil is shrinking quickly as global measures to combat the pandemic have brought many economies to a virtual standstill.

Saudi Arabia, the world’s top oil exporter, has registered over 20,000 coronavirus cases as of Tuesday with 152 deaths.

The finance ministry said non-oil revenues was also down 17 percent to 63.3 billion riyals in the period. Total expenditures reached 226.179 billion riyals, rising 4% from a year ago.

Finance Minister Mohammed al-Jadaan said last week he expects the pandemic to cause a slump in activity in the non-oil private sector this year.

Saudi Arabia does not disclose the oil price assumptions behind its budget.

An International Monetary Fund official had told Reuters last year that the Gulf Arab state would need oil prices to average $85-87 a barrel this year to balance its state budget.

The ministry said it would finance the budget deficit through local and international borrowing.

Jadaan said earlier this month that the kingdom could borrow around $26 billion more this year and will draw down up to $32 billion from its reserves to finance the government deficit.

He also said the government expected the COVID-19 crisis to last for a few more months but that it would have a limited impact on its first-quarter revenue.

(Reporting By Marwa Rashad; additional reporting by Ahmed Tolba, Writing By Marwa Rashad and Maha El Dahan; Editing by Himani Sarkar & Shri Navaratnam)