Saudi Arabia has officially approved its 2024 budget, forecasting a fiscal deficit of SAR 79 billion (21.1bn) or 1.9% GDP for the next year. This reflects the kingdom’s plan to advance its non-oil economy as a part of the Vision 2030 initiative.
The expenditures are estimated to be SAR1.3tn in 2024 with total revenue of SAR1.2tn.
With the approved national strategies, priorities, and the country’s economic divarication objectives, the kingdom aims to broaden its capital projects.
Crown Prince Mohammed bin Salman of Saudi Arabia stated that the growth in spending primarily results from the government’s commitment to carrying out numerous projects and increasing investment in strategies for sectoral and regional development, aiming to speed up economic diversification.
To stop the budget deficit in 2024 the government of Riyadh is looking to tap the international and local debts.
In a statement, Mohammed bin Abdullah AlJadaa, the Saudi Minister of Finance said, that the government will keep going in domestic and international fiscal activities to address the predicted deficit in 2024 and settle debts due both in 2024 and over the medium term.
Saudi Arabia is looking to support its market opportunities for the implementation of government fiscal operations for the betterment of economic growth, like financing development and infrastructure projects.
The public debt of the kingdom is expected to reach SAR1.1tn or 25.9% of GDP by the end of 2024, a 1.1% annual increase in contrast with SAR1.02tn or 4.8% in 2023’s GDP.
The finance ministry says that the budget of 2024 verifies that the government is going carry on with funding and supporting the execution of programs, initiatives, and economic transformation projects in the Gulf state.
Saudi Arabia’s Passage to Vision 2030
Meanwhile, AlJadaa reiterated that the ongoing economic and structural reforms in Saudi Arabia have positively impacted fiscal and economic indicators. These reforms are contributing to economic diversification and promoting fiscal stability.
Saudi Arabia’s economy did significant growth last year because it made a substantial amount from high oil prices, which were around $100 per barrel on average. This helped the country grow its economy more than any other country in the G20 and also led to Saudi Arabia having a budget surplus for the first time in almost ten years.
Over the years, the country has undergone a fast and significant transformation. The government’s economic reform initiative, part of Vision 2030, is relying on the country’s sovereign fund, the Public Investment Fund. The aim is to reduce the economy’s heavy dependence on oil revenues.
Saudi Arabia is currently amid Vision 2030, an initiative that requires great investments to reduce reliance on hydrocarbon income. These funds are important for developing significant infrastructure projects, encouraging sectors like tourism and industry, and expanding the private sector.
Despite the International Monetary Fund lowering its GDP growth forecast for Saudi Arabia to 0.8 percent in 2023, with a projected 4 percent growth for the following year, major credit ratings agencies such as S&P Global, Moody’s, and Fitch Rating have upgraded the country’s sovereign debt rating to “A/A-1,” “A1,” and ‘A+’, respectively. This positive evaluation is attributed to Saudi Arabia’s robust fiscal and external balance sheets, coupled with its substantial reform momentum.