Saudi budget recorded a deficit for the eighth consecutive quarter, amounting to around SAR 30 billion (USD 8 billion) in the third quarter of 2024. This is almost double the deficit of the second quarter.
This comes amid continued “high government spending” to meet the requirements of the “Vision 2030” economic transformation plan, which is aimed at diversifying the economy and reducing reliance on the oil sector.
Details
According to data from the Ministry of Finance for the third quarter, total expenditures exceeded SAR 339 billion, while revenues amounted to approximately SAR 309 billion.
Non-oil revenues surpassed SAR 118 billion, reflecting a 6% YoY increase.
Oil revenues reached nearly SAR 191 billion, marking a 30% YoY growth rate.
So what
According to the preliminary budget statement for 2025, released on September 30, the government expected to record a deficit of SAR 118 billion (USD 31.4 billion) this year, about 3% of GDP.
The deficit is expected to continue over the next three years, peaking in 2027 at SAR 140 billion, described as a “projected deficit.”
The Ministry of Finance is financing the deficit through external debt.
Some context
The total deficit of the world’s largest oil exporter has reached about SAR 58 billion over the past nine months.
Revenues totaled SAR 956 billion, reflecting an annual increase of 12%.
Meanwhile, expenditures exceeded SAR 1 trillion, rising by 13%.
The widening deficit is primarily due to a significant increase in “investment spending” on mega-projects across the country.
This comes amid a roughly 20% drop in oil prices since the start of the year, with the Kingdom reducing its oil production to 9 million barrels daily.
Now what
The Riyad Bank Purchasing Managers’ Index (PMI), released on Tuesday, revealed that growth in Saudi Arabia’s non-oil sector continued to accelerate in October, marking the third consecutive month of growth on the back of a rise in new orders to the highest level since March.
The PMI rose from 56.3 in September to 56.9 in October, recording the “highest reading” in six months.
Naif Alghaith, Chief Economist at Riyad Bank, expects the non-oil sector’s contribution to GDP to surpass 52%, with growth exceeding 4% this year.
It’s worth noting that Saudi Arabia’s strategy relies on investing hundreds of billions of dollars in infrastructure and domestic reforms.
This is aimed at developing new sectors, diversifying income sources, expanding the private sector, and creating job opportunities.
