Saudi Arabia, a beacon of economic potential, is making waves with its ambitious fiscal plans for 2025. The Ministry of Finance has unveiled a pre-budget statement predicting total revenues to approximate SR1.18 trillion ($315.73 billion). Although this marks a slight decline from earlier forecasts, it reflects a strategic approach to navigating global economic uncertainties.
With expenditures estimated at SR1.28 trillion, the Kingdom anticipates a budget deficit of SR101 billion, a figure that, while higher than previous estimates, aligns with its expansionary fiscal policies. This approach is set to continue in the medium term, supporting essential services and strategic projects that drive economic growth and sustainable development, as emphasized by Finance Minister Mohammed Al-Jaadan.
Vision 2030: A Blueprint for Growth
Saudi Arabia’s fiscal strategy is intricately woven with the objectives of Vision 2030. The 2025 budget is designed to bolster fiscal and economic reforms, maintaining a balance between a strong fiscal stance, financial reserves, and low public debt. Prioritizing spending efficiency, the Kingdom is committed to projects that stimulate sustainable economic growth while stabilizing and diversifying its economy.
Key initiatives under Vision 2030 aim to enhance social services, regulatory frameworks, and empower the private and non-profit sectors. The focus is on developing promising sectors, attracting investments, and expanding non-oil exports. The tourism and entertainment sectors, in particular, are witnessing remarkable growth, supported by national development funds and the Public Investment Fund, ensuring robust and sustainable expansion in non-oil industries.
Oil Market Stability and Economic Resilience
Saudi Arabia, in collaboration with OPEC+, has implemented strategic oil production adjustments to ensure market stability. The Kingdom’s average production is set to remain at 8.96 million barrels per day from early 2024 through July. A new production agreement for 2025, involving major producers like Russia and the UAE, extends voluntary production cuts to maintain market equilibrium.
Despite the global challenges, Saudi Arabia’s real GDP is poised to grow by 0.8 percent in 2024, driven by a 3.7 percent increase in non-oil activities. Private consumption has surged, fueled by a vibrant retail sector and a flourishing hospitality industry. Visitor numbers to cultural and entertainment events have also risen, thanks to streamlined visa procedures and expanded eligibility categories.
Financial Strategies: Building a Resilient Future
Saudi Arabia’s robust fiscal position is underpinned by strong financial reserves and manageable public debt, providing a buffer against economic shocks. Through the National Debt Management Center, the Ministry of Finance crafts an annual borrowing plan to ensure debt sustainability, diversify financing sources, and tap into global markets. This aligns with Vision 2030’s goals of deepening the domestic debt market and fostering financial sector growth.
The Kingdom is actively expanding its financing avenues through bonds, sukuk, and loans, while enhancing its sovereign credit rating. Controlled debt growth supports the necessary expansionary spending to achieve Vision 2030 objectives, ensuring fiscal sustainability and resilience against future challenges.
Saudi Arabia’s economic transformation is gaining recognition, as reflected in the reaffirmation of its credit ratings. Fitch Ratings, Moody’s, and S&P Global Ratings have all given positive outlooks, underscoring the Kingdom’s commitment to structural reforms and sustainable financial planning.
