Saudi Arabia approves 2024 state budget, forecasts SAR79bn deficit

Saudi Arabia has approved its state budget for 2024, which forecasts a fiscal deficit of SAR79bn ($21.1bn) or 1.9 per cent of GDP next year, as the kingdom forges ahead with plans to bolster its non-oil economy under Vision 2030.

The budget estimates expenditures of SAR1.3tn in 2024 and total revenues of SAR1.2tn.

The kingdom seeks to expand spending on capital projects in line with approved national strategies, national priorities, and the country’s economic diversification targets.

Saudi Crown Prince Mohammed bin Salman said that the increase in spending is mainly due to the government’s keenness to implement several projects and expand spending on sectoral and regional development strategies that accelerate economic diversification.

The Cabinet reviews the items of the state’s general budget and issues its decision, which includes the following:
1-Revenues are estimated at (SAR1,172,000,000,000).
2-Expenditures shall be approved in the amount of (SAR1,251,000,000,000).
3-The deficit is estimated at… pic.twitter.com/NY45WVKgZt

— SPAENG (@Spa_Eng) December 6, 2023

The government in Riyadh plans to tap international and local debt markets in 2024 to plug the budget deficit.

“The government will continue domestic and international fiscal operations to bridge the expected 2024 deficit and repay debt due during 2024 and in the medium-term,” Mohammed bin Abdullah AlJadaa, Saudi Minister of Finance said in a statement.

Saudi Arabia will leverage market opportunities to implement alternative government fiscal operations that enhance economic growth, such as financing development and infrastructure projects.

The country’s public debt balance is expected to reach SAR1.1tn or 25.9 per cent of GDP by the end of 2024, a 1.1 per cent year-on-year increase compared to SAR1.02tn or 4.8 per cent of the GDP in 2023.

The finance ministry said that the 2024 budget confirms that the government will continue funding and supporting the implementation of programmes, initiatives, and economic transformation projects across the Gulf state.

Saudi Arabia’s Road to Vision 2030

Meanwhile, AlJadaa reiterated that the economic and structural reforms that are being implemented in Saudi Arabia have improved fiscal and economic indicators, driving economic diversification and fiscal s fiscal stability.

Saudi Arabia’s economy surged last year amid a huge windfall from high oil prices which averaged about $100 per barrel, resulting in the highest GDP growth among G20 nations and the country’s first budget surplus in almost a decade.

The country has undergone a breakneck transformation over the years and the country’s sovereign fund, the Public Investment Fund, is central to the government’s economic reform initiative as it looks to wean the economy off its heavy reliance on oil revenues as part of Vision 2030.

Saudi Arabia is midway through Vision 2030, which requires billions of dollars in investments to help wean the economy off hydrocarbon income, build big infrastructure projects to develop sectors such as tourism and industry and expand the private sector.

Though the International Monetary Fund further lowered its GDP growth forecast for Saudi Arabia for 2023 to 0.8 per cent and projected growth of 4 per cent next year, S&P Global, Moody’s and Fitch Rating – upgraded the country’s sovereign debt rating to “A/A-1”, “A1” and ‘A+’, respectively, citing its robust fiscal and external balance sheets and significant reform momentum.

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