(Bloomberg) -- Aramco kept its $31 billion dividend payout to the Saudi government and other investors despite lower profit, a boon for the kingdom’s economy as it struggles with a budget deficit.

The generous payouts from the world’s biggest oil exporter are becoming increasingly important for the Gulf state as crude prices remain below the levels it needs to balance its budget. Crown Prince Mohammed bin Salman is pursuing expensive ventures such as the futuristic project of Neom, making a big bet on tourism and seeking stakes in sporting leagues as he tries to transform the economy. 

Aramco has said that the distributions, including a special component, will be higher this year than in 2023, which will help fund some of the kingdom’s vast spending plans. Global oil majors such as Shell Plc and BP Plc have also kept their focus on returning cash to shareholders.

The kingdom needs oil at around $108 a barrel to balance the budget, including domestic spending by its sovereign wealth fund, according to Bloomberg Economics. Benchmark crude prices in London were trading near $83 a barrel on Tuesday. 

Saudi Arabia has already delayed some projects that are part of its economic transformation plan past 2030 and scaled back its ambitions for Neom. Its economy has contracted for three quarters straight while the budget has been in deficit for six consecutive quarters. 

Aramco’s net income fell 14% to $27.3 billion in the first quarter compared with a year earlier, according to a statement Tuesday. Its free cash flow — cash from operations minus capital expenditure — of $22.8 billion in the period was less than the total dividend payout. The shares were little changed in Riyadh. 

Morgan Stanley analysts including Martijn Rats said cash flow came in above their estimates, primarily because capital expenditure was lower than expected. Aramco said it spent $10.8 billion in the quarter out of a forecast range of $48 billion to $58 billion this year. That is expected to increase this decade as the company continues work on major projects like the Jafurah gas development as it seeks to boost supply of the fuel for power and industry.

The company’s massive earnings comes even as Saudi Arabia has revived plans for a follow-on offering of the company’s shares that would help raise billions of dollars. But global investors, some of whom had balked at the kingdom’s valuation expectations and the low yield compared with industry peers during the firm’s 2019 IPO, will keep an eye on the Saudi economy and the country’s oil output levels.

Read: Saudi Arabia Hikes Oil Selling Prices for All Grades to Asia 

Saudi Arabia has been leading efforts by the Organization of Petroleum Exporting Countries and its allies in restricting production in an effort to prevent a supply surplus and shore up prices. The group will gather on June 1 to consider whether to extend current supply curbs into the second half of the year. A majority of traders and analysts surveyed by Bloomberg expect the group to prolong the curbs, perhaps to the end of 2024.

(Updates with analyst comment in the seventh paragraph.)

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