Andersen

The Kingdom of Saudi Arabia released higher than expected surplus budget of 102 billion Saudi Riyals for the year 2022, while set a surplus of only twelve billion Saudi Riyals was previously expected in 2022 budget. The surplus of 2022 exceeded expectations as well as the Kingdom GDP which also exceeded the expectations and registered a growth of 8.5% when most economists estimated a growth rate of 7.5% for 2022. The achieved 2022 surplus represented 2.6% of the Kingdom GDP.

The year 2022 actual numbers came as follow

Year 2022	Actual in Saudi Riyals
Total Revenue	1.234 trillion
Spending	1.132 trillion
Surplus	102 billion
Surplus as percentage of GDP	2.6%

The reason for 2022 achieving surplus was the higher oil prices during the year which averaged much higher prices than what economists estimated for the budget. The kingdom budget for 2022 was based on oil prices between 75 and 80 dollars per barrel while the average price of barrel of oil averaged much higher.

In 2022, oil prices spiked higher due to geopolitical events such as Russia and Ukraine war as well as the economic sanction imposed on Russia that put lots of pressure on crude oil supplies resulted in higher prices. In fact, the average price of crude oil from beginning of 2022 until October 2022 was about 101.7 dollars per barrel compared to 69.5 dollars during the same period of the previous year.

Internally, the Kingdom has experienced economic recovery and steady expansion after the COVID-19 pandemic crises accompanied by governmental economic and financial control policies and initiatives that added more efficiency and productivity to the Kingdom economic activities. All contributed to achieving 2022 surplus budget.

As for 2023 budget, the Saudi government is expecting slower growth and lower revenue due to global economic uncertainties and prospects of global economic recession. The Kingdom 2023 budget is forecasting a conservative budget scenario estimating revenue of 1.23 trillion Saudi Riyals while expecting spending of 1.13 trillion Saudi Riyals with an expected a surplus of sixteen billion Saudi Riyals that represent a 0.4% of the GDP.

The Year 2023 expected numbers came as follow:

Year 2023	Projected in Saudi Riyals
Total Revenue	1.130 trillion
Spending	1.114 trillion
Surplus	16 billion
Surplus as percentage of GDP	0.4%

The expected surplus is considered a remarkable success by the government of Saudi Arabia, and it represent a continued effort to maintain economic and financial reforms that will benefit the Kingdom economy in the future. Despite the global economic slowdown, the inflationary pressure in many economies, and geopolitical crises all over the world, the Saudi budget of 2023 is expected a surplus of 0.4% of GDP.

As released by the Ministry of Finance, the surplus will be directed toward enhancing government reserves, supporting national funds, helping strategic programs and projects with social and economic dimensions, and repaying part of the public debt.

The released statements indicated that 2023 budget goal is to preserve safe and acceptable levels of government reserves to enhance the Kingdom capabilities of facing any external shocks. Thus, the Saudi Central Bank (SAMA) is aiming to increase the reserves to 399 billion Saudi Riyals by the end of 2023.

The government also indicated that domestic and foreign borrowing will continue assuring repayment of the debt principal maturing in 2023 and in mid-term, to take advantage of new opportunities according to market situations to be able to finance strategic projects related to the Kingdom’s 2030 vision. Therefore, the national debt is projected to reach 951 billion Saudi Riyals or around 24.6% of the Kingdom’s GDP in 2023.

As we mentioned previously, the Kingdom economic growth for 2023 is expected at 3.1% (real growth), which is much lower than 2022 of 8.5%. Such expected decline is due to expectation of global economic slow down and looming shadow of global inflation pressure.

Saudi Arabia GDP Economic Indicators as follow:

(Source GASTAT in Saudi Arabia)

	Actual 2021	Actual 2022	Projected 2023	Projected 2024	Projected 2025
Real GDP growth	3.2%	8.5%	3.1%	5.7%	4.5%
Nominal GDP in bn in Saudi Riyals	3.125	3.957	3.869	3.966	4.247
Inflation Rate	3.1%	2.6%	2.1%	2.1%	2.0%

To conclude, 2023 Kingdom of Saudi Arabia budget is conservatively based due to global economic uncertainties and looming global recession. Nevertheless, it indicates a positive economic outlook for 2023. With expected rapid growth in the non-oil sector and stable oil prices in the range of 70 to 85 dollars per barrel it should support an expected growth of 3.1% real GDP. As for public debt, the Kingdom’s debt is considered lower than many advanced economies.

With the government still focusing on spending in education, healthcare, social development, and major infrastructure projects, planned expenditure is slightly lower than actual spending of 2023, which is still higher than budgeted spending in 2022. Such commitment of higher spending reflects the Kingdom’s government supporting of Vision of 2030.