DUBAI, Sept 6 Reuters The International Monetary Fund IMF projects Saudi Arabia to swing to a fiscal deficit of 1.2 of GDP in 2023, from a surplus of 2.5 in 2022, it said in its latest assessment report on Wednesday.

The Saudi government has forecast a second consecutive budget surplus for this year, albeit narrower than in 2022.

Saudi Arabia39;s economy grew 8.7 last year on the back of high oil prices, allowing it to record its first budget surplus in almost a decade. But cuts to production this year and lower prices are expected to hit oil revenues and weigh on growth.

On Tuesday, Saudi Arabia and Russia said they would extend voluntary oil cuts to the end of the year, despite a rally in the oil market and analyst expectations of tight supply in the fourth quarter, sending prices higher.

Overall economic growth in 2023 is projected to slow sharply to 1.9 according to the IMF, with oil GDP growth to decline by 2.5 this year; nonoil GDP growth is projected at 4.9 this year.

The outlook is positive with nonoil GDP growth momentum expected to remain strong despite an uncertain external environment, the IMF said in its Article IV country report, adding risks to the outlook were balanced.

Governmentled reforms and the growth of private investment in new sectors has supported nonoil economic growth in Saudi Arabia, a key element of Vision 2030, the kingdom39;s economic transformation plan overseen by Crown Prince Mohammed bin Salman.

Vision 2030 is a vast economic…