Saudi Arabia is positioning itself as a beacon for investment, with an eye-catching fiscal strategy set out in its pre-budget statement for fiscal year 2025. The Kingdom anticipates revenues of approximately SR1.18 trillion ($315.73 billion), which represents a slight 4 percent dip from earlier projections. This estimate is crafted from a balanced scenario that considers the current global economic challenges and geopolitical risks.
Despite a projected budget deficit of SR101 billion, or 2.3 percent of GDP, the Saudi government is confident in its approach. This deficit, which is expected to persist in the medium term, is a result of expansionary spending policies designed to stimulate economic growth. Finance Minister Mohammed Al-Jaadan confirmed that the government remains committed to prioritizing essential services and strategic projects that bolster economic development and sustainable growth.
The revised estimates for the fiscal year 2024 show revenues climbing to SR1.24 trillion, a 6 percent increase, while expenditures are expected to rise by 8 percent to SR1.35 trillion, leading to a deficit due to heightened spending. This aligns with the broader Saudi Vision 2030, which aims to drive fiscal reform and economic diversification.
Driving Economic Diversification and Growth
Central to the Saudi Vision 2030 is the Kingdom’s commitment to enhancing social services, regulatory reforms, and transformative spending. By empowering the private and non-profit sectors, Saudi Arabia is set on a path to develop promising industries, attract investments, and expand non-oil exports. Significant strides have been made in tourism and entertainment, supported by the Public Investment Fund and national development funds, which are critical to ensuring long-term economic resilience.
Further stabilizing the economy, Saudi Arabia and OPEC+ have agreed to reduce oil production, with plans to gradually restore quantities in response to market conditions. This strategic move aims to maintain stability in oil markets, with production adjustments set to continue until November 2025.
The Kingdom’s real GDP is projected to grow by 0.8 percent in 2024, driven by a robust 3.7 percent growth in non-oil activities. This growth is supported by increased private consumption, particularly in wholesale, retail trade, and hospitality sectors, alongside a surge in visitor numbers due to facilitated visa procedures.
Financial Stability and Global Confidence
Saudi Arabia’s solid fiscal position, marked by strong reserves and low public debt, enables it to weather economic shocks and secure financing over various terms. The National Debt Management Center’s annual borrowing plan emphasizes debt sustainability, diversification of financing sources, and market access, all in alignment with Vision 2030 goals.
By expanding financing through bonds, sukuk, and loans, and enhancing its sovereign credit rating, Saudi Arabia is poised for financial growth. This strategy is supported by global confidence, as evidenced by Fitch Ratings, Moody’s, and S&P Global Ratings, all of which affirm the Kingdom’s strong economic outlook driven by structural reforms and efficient fiscal policies.
Saudi Arabia stands as a compelling opportunity for investors, with its strategic fiscal planning and economic reforms paving the way for sustainable growth and prosperity.
