In an exciting development for investors worldwide, Saudi Arabia’s Ministry of Finance has outlined its pre-budget statement for the fiscal year 2025, projecting a total revenue of around SR1.18 trillion ($315.73 billion). Though this represents a slight 4 percent decrease from previous estimates, it showcases the Kingdom’s strategic approach to navigating global economic challenges and geopolitical risks.
Flexible Fiscal Framework and Strategic Focus
The Ministry’s approach emphasizes maintaining a flexible fiscal framework, allowing the government to adapt to changing economic conditions. With preliminary expenditure estimates set at SR1.28 trillion, a budget deficit of SR101 billion is anticipated, representing 2.3 percent of the GDP. This is expected to continue in the medium term due to expansionary spending policies aimed at bolstering essential services and strategic projects that drive economic growth.
Finance Minister Mohammed Al-Jaadan has underscored the government’s commitment to prioritizing spending on vital services and strategic initiatives that align with Saudi Vision 2030. The revised estimates for FY 2024 indicate revenues of SR1.24 trillion, a 6 percent increase, with expenditures projected at SR1.35 trillion, resulting in an SR118 billion deficit.
Driving Growth Through Vision 2030
The 2025 budget is in alignment with Vision 2030, focusing on fiscal and economic reforms to balance the Kingdom’s strong fiscal position, financial reserves, and low public debt. Key initiatives include accelerating sustainable economic projects, enhancing social services, and empowering private and non-profit sectors. Vision 2030 also emphasizes transformative spending and investment in promising sectors, aiming to diversify the economy and expand non-oil exports.
Significant progress is being made in tourism and entertainment, with support from the Public Investment Fund and national development funds, fostering sustainable growth in non-oil sectors. This positions Saudi Arabia for long-term economic resilience. To stabilize oil markets, Saudi Arabia, along with OPEC+ countries, has agreed to production cuts, ensuring market stability until 2025.
Solid Financial Footing and Future Prospects
Saudi Arabia’s robust financial reserves and manageable public debt offer a solid foundation to weather economic fluctuations. The Ministry of Finance, through the National Debt Management Center, is implementing a borrowing plan to ensure debt sustainability and diversify financing sources. This strategy aligns with Vision 2030, aiming to deepen the domestic debt market and enhance the Kingdom’s sovereign credit rating.
Global rating agencies have recognized Saudi Arabia’s economic transformation, with Fitch Ratings affirming an A+ rating, Moody’s an A1 rating with a positive outlook, and S&P Global Ratings upgrading its outlook from stable to positive. These ratings highlight the Kingdom’s commitment to sustainable growth and efficient financial planning, making it an attractive destination for foreign investment.
