Are you ready to explore the dynamic investment landscape of Saudi Arabia? The Kingdom is making waves with its strategic financial planning and ambitious goals, and now might be the perfect time to join this promising journey. The Ministry of Finance has unveiled its pre-budget statement for 2025, forecasting total revenues of approximately SR1.18 trillion ($315.73 billion), a slight 4 percent decrease from prior estimates. This adjustment reflects a cautious approach to global economic uncertainties.
Fiscal Flexibility and Strategic Spending
Saudi Arabia is committed to maintaining a flexible fiscal framework, as highlighted by the Ministry of Finance. The preliminary estimates indicate total expenditures will reach SR1.28 trillion, leading to a projected budget deficit of SR101 billion. This deficit, which is 38 percent higher than previous forecasts, is seen as a natural outcome of ongoing expansionary fiscal policies. Finance Minister Mohammed Al-Jaadan emphasized that the government will prioritize essential services for its citizens while executing strategic projects to foster economic growth and sustainable development.
The revised estimates for 2024 show revenues of SR1.24 trillion, marking a 6 percent increase from earlier predictions. Expenditures are expected to rise by 8 percent to SR1.35 trillion, resulting in a deficit of SR118 billion, primarily due to increased spending. This financial strategy aligns with the ambitious Saudi Vision 2030, focusing on fiscal reforms, economic diversification, and enhancing spending efficiency.
Driving Non-Oil Sector Growth
Saudi Arabia is taking bold steps to diversify its economy and reduce reliance on oil. The government is accelerating projects that promote sustainable economic growth while stabilizing and diversifying the economy. Key areas of focus include social services, regulatory reforms, and transformative spending through sovereign funds. Vision 2030 initiatives aim to attract investment, stimulate local industries, and expand non-oil exports, with notable progress in tourism and entertainment sectors driven by the Public Investment Fund and national development funds.
To ensure stability in oil markets, Saudi Arabia, alongside OPEC+, has implemented production cuts, with the Kingdom’s average output reaching 8.96 million barrels per day in 2024. A new production agreement for 2025 will see continued voluntary cuts by Saudi Arabia, Russia, and the UAE, ensuring market stability and gradual restoration of production levels.
Building a Resilient Economic Future
Saudi Arabia’s real GDP is projected to grow by 0.8 percent in 2024, bolstered by a 3.7 percent increase in non-oil activities. Private consumption rose by 2.4 percent in the first half of 2024, driven by growth in trade and hospitality sectors. The Kingdom has also maintained acceptable inflation levels, with the consumer price index rising by 1.6 percent from the start of 2024 to August. Proactive government measures, including price ceilings and food supply enhancements, have helped control inflation.
With strong financial reserves and manageable public debt, Saudi Arabia is well-positioned to handle economic shocks while pursuing long-term growth. The Ministry of Finance, through the National Debt Management Center, has a strategic borrowing plan to ensure debt sustainability and access to global markets. This approach aligns with Vision 2030, promoting financial sector growth and deepening the domestic debt market.
International confidence in Saudi Arabia’s economic transformation is reflected in its credit ratings. Fitch Ratings affirmed an A+ rating with a stable outlook, Moody’s maintained an A1 rating with a positive outlook, and S&P Global Ratings upgraded its outlook to positive. These ratings underscore the Kingdom’s commitment to structural reforms and fiscal policies that prioritize sustainability and efficient financial planning.
