Saudi Arabia expects deficit of 2.9% of GDP in 2024

Image credit: FAYEZ NURELDINE/Getty Images

Saudi Arabia forecasts a budget deficit of 2.9% of GDP in 2024, Finance Ministry data showed on Monday, as the kingdom increases spending to boost growth and meet the goals of its Vision economic transformation plan 2030.

The Gulf state expects to post a budget deficit of $32 billion (SAR118 billion), wider than the SAR79 billion projected in last December’s 2024 budget statement.

The Finance Ministry projects a budget deficit of up to 2.3 percent of GDP in 2025 and 2.9 percent in 2026, higher than previously estimated.

Saudi Arabia has lowered its growth forecasts. Economic output is now expected to grow by 0.8 percent in 2024, down from the previous forecast of 4.4 percent. The Arab world’s largest economy also lowered its growth forecasts for 2025-2026.

“The government is continuing its reforms to achieve the goals of Saudi Vision 2030, which are reflected in the 2025 budget and the medium term,” the finance ministry said in a statement, adding that the kingdom was seeking to accelerate its spending. on specific projects and strategies in targeted sectors.

Saudi Arabia slightly increased its revenue forecast for 2024, but significantly reduced its forecast for each of the next two years. Total revenue is expected to be SAR 1.24 trillion and public spending is estimated at SAR 1.36 trillion this year, compared to last December’s estimates of SAR 1.17 trillion and SAR 1.25 trillion, respectively. .

The kingdom projects revenues of SAR 1.18 billion and expenditures of SAR 1.29 billion in 2025, with spending likely equivalent to around 30 percent of GDP over the next three years.

Saudi Arabia, which needs an oil price of $96 a barrel to break even, will continue borrowing to close its budget deficit next year.

Meanwhile, foreign direct investment (FDI) in Saudi Arabia stagnated in the second quarter of the year, at around the same level as a year ago, with inflows amounting to $9.7 billion between January and June, according to the General Statistics Authority.

FDI is a key element of Vision 2030, an economic diversification strategy that aims to boost non-oil growth, expand the private sector and create jobs. Saudi Arabia has set a goal of attracting $100 billion in foreign investment by 2030.

Read: S&P revises Saudi Arabia’s outlook to positive on strength of its non-oil economy