The Kingdom is expected to have a deficit of 101 billion riyals (approximately 27 billion dollars) in the budget for the upcoming fiscal year.
This is equivalent to about 2.3% of the GDP, in line with the preliminary government forecasts announced in September.
Details
Total spending is expected to reach 1.285 trillion riyals in 2025, consistent with the September estimates.
This will likely represent about 30% of the GDP over the next three years.
Total revenues are expected to reach 1.184 trillion riyals.
So what
Minister of Finance, Mohammed Al-Jadaan, confirmed that the government will continue to spend on major projects like “Neom.”
These projects aim to reduce the Saudi economy’s dependence on oil, in line with “Vision 2030.”
It is worth mentioning that the revenues of the “world’s largest oil exporter” have been affected in recent years by the decline in oil prices and Saudi Arabia’s continued voluntary production cuts.
Nevertheless, the country seeks to increase spending to boost growth and implement the economic transformation plan.
Key indicators
The Kingdom’s total public debt is expected to reach SAR 1.3 trillion in 2025.
This is slightly higher than the current year’s estimated SAR 1.2 trillion and just under 30% of GDP.
The Ministry of Finance has revised the deficit estimate for 2024 to SAR 115 billion, compared to the September forecast of SAR 118 billion, which is about 2.8% of GDP.
Some context
Vision 2030 requires hundreds of billions of dollars to develop new economic sectors such as tourism and manufacturing.
It also aims to generate more sustainable sources of income.
The ambitious program includes building massive infrastructure projects, attracting billions of dollars in foreign investment, and providing job opportunities for citizens.
Rising costs associated with projects have led Saudi Arabia to recently scale back on some of them, prioritizing the completion of facilities necessary for hosting major global sporting events in the next decade, such as the “World Cup 2034.”
Now what
The economy is expected to return to growth this year after contracting in 2023, according to the Ministry of Finance.
The government expects GDP growth of 0.8% in 2024 before accelerating strongly next year to 4.6% on the back of an increase in non-oil activities.
