Saudi Arabia anticipates a fiscal deficit of nearly 3% of GDP in 2024 as it ramps up spending to stimulate growth and achieve Vision 2030 goals. The kingdom projects a deficit of 118 billion riyals ($32 billion) for this year, surpassing the earlier forecast of 79 billion riyals.
Despite reduced oil prices and voluntary production cuts, Saudi Arabia continues to increase its expenditures. The deficit is expected to be 2.3% of GDP in 2025.
We have more revenues than expected…the spending is where the increase happened,
noted Naif al-Ghaith, chief economist at Riyad Bank.
Vision 2030 is a comprehensive economic reform plan aiming to diversify the economy away from oil dependence, requiring significant investment in new sectors and sustainable revenue sources.
The IMF suggests that the kingdom needs oil prices at nearly $100 per barrel to balance its budget. The government forecasts real GDP growth of 0.8% this year, recovering from last year’s decline, with a substantial increase to 4.6% in 2025, partly due to boosted oil production.
For 2024, total revenue is expected to reach 1.24 trillion riyals, with government spending projected at 1.36 trillion riyals. In 2025, revenues and expenditures are anticipated to be 1.18 trillion riyals and 1.29 trillion riyals, respectively, with spending likely to constitute about 30% of GDP over the next three years.
The government also foresees a growth in non-oil activities of 3.7% in 2024, compared to an average of nearly 6% over the past three years.