PEC kingpin Saudi Arabia plans another boost in government spending in 2019 to spur its economy, but is proceeding cautiously with an eye on potential oil market headwinds in the year ahead. The world’s largest crude exporter, whose fiscal plans are scrutinized for hints of how it will manage the oil market, released its 2019 preliminary budget, estimating a 7% year-on-year rise in government expenditure to 1.1 trillion riyals ($295 billion).

It also forecast revenue, some 70% of which come through oil sales, would come in at 978 billion riyals ($261 billion), an 11% increase from 2018, due to this year’s surge in crude prices. Finance Minister Mohammed al-Jadaan said in a statement that the deficit spending is intended to further the country’s ambitious structural reforms under the Vision 2030 program, which seeks to diversify Saudi Arabia’s economy away from oil revenues. The kingdom aims for a balanced budget by 2023, he added, but warned that stability in the oil market would be key to making the reforms sustainable.

“The kingdom’s public finance is facing challenges, notably oil price fluctuations, which hinder fiscal planning,” the preliminary budget stated. Further 2019 budget details are expected to be released in December.Analysts with Saudi-based investment bank Al-Rahji Capital said the budget appeared “conservative,” given that oil prices have risen and Saudi Arabia’s crude exports are likely to increase in the months ahead under an agreement reached June 23 by OPEC and 10 non-OPEC allies to raise production by some 1 million b/d. Brent crude futures were trading at $83.01/b at 0006 GMT, up almost 50% from a year ago.