The world's leading oil producer and exporter Saudi Arabia is forecast to wipe out a projected 10.4-billion-dollar deficit for 2003 and achieve a surplus of four billion dollars, an economic report said Sunday.

The forecast is based on an average oil production of 8.5 million barrels per day (bpd) and an average price for the crude at 22 dollars for 2003, the quarterly report of Riyad Bank said.

Saudi crude prices topped 30 dollars a barrel in the first three months 2003, it said.

The report expects total government revenues to hit 59.7 billion dollars and expenditures to remain at the projected 55.7 billion dollars. Actual spending is normally 10 per cent higher than projections.

Revenues were budgeted at 45.3 billion dollars.

The surplus is lower than National Commercial Bank projections -- based on an average oil price at 24 dollars and oil output at 8.7 million bpd -- which put the budget surplus at 13 billion dollars.

The government provides a breakdown neither of oil revenues nor the price of crude on the basis of which the budget was calculated, but economists estimated the price at 17.5 dollars a barrel and oil revenues at 32 billion dollars.

Saudi Arabia is believed to have been producing 9.5 million barrels a day to ensure regular supplies to the world market before and during the war on Iraq.

But its production will be cut to 8.256 million bpd on June 1 in line with a new quota from the Organisation of Petroleum Exporting Countries (OPEC).

The Riyad Bank report predicted a fall in oil prices to between 15 to 18 dollars a barrel in the second half of this year.

The report revised upward its projections for the growth in nominal and real Gross Domestic Product (GDP) in 2003 to 4.45 per cent and 5.4 per cent respectively based on the higher-than-expected growth in the oil sector.