The rising tide of higher oil prices is lifting the Saudi economy, but growing tax receipts stemming from economic reforms are also providing welcome relief. The budget deficit fell to just $2bn in 2Q 2018, the lowest figure since the government began providing quarterly updates last year.

The narrowing budget deficit came despite Riyadh following through with its pledged spending spree (MEES, 22 December 2017). The $75bn Q2 outlay was $19bn more than 2Q 2017, although still well below 4Q...