Andersen

On November 26, 2024, The Saudi Council of Ministers, headed by Prince Mohammed bin Salman, Crown Prince and Prime Minister, approved the state’s general budget for the year 2025 this evening and issued a decision regarding it. As it was expected by many economists the 2025 Saudi budget projected a deficit of $27 billion. Public expenditures expected to be at $243 billion, While public revenue projected at $316 billion.  For the year ending 2024 budget, the authorities estimated revenue at $328 billion, and spending at $359 billion, with a deficit of $31 billion.

The authorities projected capital spending at $49 billion for 2025, which constitutes about 14% of total projected public spending. Oil revenue for the current year (2024) is estimated to be $202 billion, while non-oil revenue is expected to jump to $126 billion, which represents 38% of 2024 revenue as the result of the government aim of diversifying its source of revenue and not only depend on oil export revenue.

In the 2025 budget, the government allocated $69 billion to the health and social development sector, and $54 billion to the education sector, concentrating on the well being of the Saudi citizens and improving their quality of lives. The estimated $27 billion deficit of 2025, which slightly less than 2024 $31 billion of 2024 will be the third consecutive deficit in a raw the Kingdom of Saudi Arabia experienced because of massive governmental spending on development projects and social programs, in addition to decline in revenue resulted from recent lower oil prices and less oil export as determined by OPEC and other oil producers.

Sectors of 2025 Saudi Budget Projected Spending:

The authorities at the Kingdom of Saudi Arabia government indicated that 2025 budget aims to sustain the continued effort to expand the government plans to improve and increase the quality lives and related services provided to citizens and further improve all services provided to Saudi citizens. Furthermore, 2025 budget also concentrate on building strategies that will have economic impact on jobs creation, private business enhancement, the overall strengthen of the Saudi economy and the achievement of goals established by the Saudi government related 2030 VISION projects. To conclude, the Saudi economy condition remains healthy and progressive as the GDP in 2024 reached $1.091, at the same time rate of inflation has shown a moderate decline to reach 1.7% compared to the record number recorded in 2023, which was 2.3%.

Saudi Economy GDP Growth & Inflation Rates Indicators:

Regarding the progress of Saudization of the private sector, the number of Saudi workers in the private sector and small and medium enterprises has grown by 23.4% since 2016. Here, we should recolonize the contribution of the Saudi Tourism Ministry which has played a major role of employing large numbers Saudi workers and it is one of the largest contributors to job creation in the Saudi economy.

As for the projected 2025 projected deficit, it comes within the financial planning of the budget as the Kingdom aims to continue local and international financing operations with the aim of covering such expected deficit in the 2025 budget to pay the principal of the debt due during 2025 in medium terms. In addition, the Kingdom government will seek available alternatives that will meet conditions of the financial markets to implement alternative government financing operations that would enhance economic growth. Such alternative financing will help in implementing major projects related to 2030 Vision that Kingdom is pursuing.

As for the national debt of Kingdom of Saudi Arabia, the level the public debt balance is expected to reach about $347 billion (equivalent to 30% of GDP) in 2025, that in comparison to about $320 billion in 2024 (equivalent to 29% of GDP), that shows that level of national debt remains sustainable.

To summarize, the 2025 budget aims to maintain the Kingdom’s financial position and achieve financial sustainability by maintaining sustainable levels of public debt and significant government reserves. In addition to enhance the Kingdom’s ability to deal with any unexpected external shocks. Also, we should indicate that the government reserves at the Saudi Central Bank (SAMA) will continue to be maintained at the same level as in 2024 by the end of 2025, amounting to about $104 billion.

Finally, we can say that 2025 Saudi budget expressed economic and financial reforms witnessed by the progress and growth of Saudi economy that have resulted in an improvement in financial and economic indicators, resulted from economic diversification and financial stability. Such results expressed clearly by 2024 results indicators and the continued role of non-oil activities in enhancing GDP growth.