Saudi Arabia's Landmark Budget
Paving the Way for Record Economic Growth and Sustainable Development
The Saudi Ministry of Finance announced on September 30, 2024, the Pre-Budget Statement for Fiscal Year 2025, estimating total expenditures to reach SAR 1,285 billion (USD 342.7 billion) and total revenues to reach SAR 1,184 billion (USD 315.7 billion), leading to a deficit of 2.3% of Gross Domestic Product (GDP). The statement highlighted that the Government will continue increasing strategic transformational spending to achieve economic diversification and sustainable growth.
The statement further estimated that total revenues for FY 2025 would reach approximately SAR 1,184 billion (USD 315.7 billion), increasing to SAR 1,289 billion (USD 343.7 billion) by 2027. Total expenditures are expected to reach SAR 1,285 billion (USD 342.7 billion), rising to SAR 1,429 billion (USD 381.1 billion) in 2027. It was confirmed that, given ongoing economic developments in Saudi Arabia and the implementation of various financial and economic initiatives, the 2025 budget is expected to record a deficit of around 2.3% of GDP. The adoption of fiscal policies is seen as contributing to the stability and sustainability of the state budget.
The statement also noted that GDP growth rates were bolstered by the expansion of non-oil activities, benefiting sectors like tourism, entertainment, transportation, logistics, and industry. These developments contributed to improving the quality of life, empowering the private sector, and reducing unemployment to its lowest historical levels. This has been reflected positively in the forecasts of international organizations and credit rating agencies regarding Saudi Arabia’s economic performance. The statement highlighted expectations for 2024, with real GDP growth projected at 0.8%, supported by 3.7% growth in non-oil activities. Additionally, a recent decline in interest rates is anticipated to boost demand, which could positively impact economic growth. Inflation is expected to reach approximately 1.7% by the end of 2024.
The Government emphasized its commitment to maintaining targeted spending on essential services for citizens and residents, along with strategic projects aimed at enhancing economic growth and sustainable development. Saudi Arabia is expected to see positive growth rates during 2025 and over the medium term due to ongoing reforms, strategies, and projects under Saudi Vision 2030. These efforts will continue to diversify the economic base, strengthen the private sector, and grow promising sectors, supporting job creation and business opportunities. The Government follows a long-term fiscal planning methodology, ensuring a focus on strategic transformational spending to achieve economic gains and sustainable growth. Public finance remains flexible and capable of addressing medium- and long-term challenges, with institutions like the Public Investment Fund (PIF) and the National Development Fund (NDF) playing pivotal roles in supporting economic stability.
The encouraging forecast for the Saudi economy in 2025 builds on positive performance in recent years. The 2025 Pre-Budget Statement estimates real GDP growth at 4.6%, reflecting the Kingdom’s commitment to its ambitious strategies and sustainable development goals, which increase investor confidence and strengthen Saudi Arabia’s regional and global economic position.
Despite global economic slowdowns, ongoing challenges, and geopolitical tensions, Saudi Arabia has demonstrated fiscal resilience and economic flexibility, supported by safe government reserve levels, acceptable public debt, and a flexible spending policy that allows the country to manage potential future crises.
The Government intends to continue borrowing according to the approved annual borrowing plan to finance the expected budget deficit and repay debt due in FY 2025. It will also explore market opportunities to implement financing activities, including alternative government financing. The public debt portfolio is expected to increase in a deliberate manner to ensure debt sustainability, driven by expanded spending to accelerate programs and projects aligned with Saudi Vision 2030 goals.
The Pre-Budget Statement, issued for the seventh consecutive year, is part of the Kingdom’s ongoing efforts to enhance transparency in public finance and fiscal disclosure. It reflects the Government’s commitment to completing reforms that have strengthened its fiscal position despite global economic challenges.
Additionally, the Saudi government aims to exceed the size of its economy to reach over SAR 4 trillion (USD 1.07 trillion) for six consecutive years from 2022 to 2027, as revealed by the 2025 Pre-Budget Statement issued by the Ministry of Finance.
Saudi Arabia’s GDP surpassed SAR 4 trillion (USD 1.07 trillion) for the first time in 2022, recording SAR 4.156 trillion (USD 1.11 trillion), and SAR 4 trillion (USD 1.07 trillion) in 2023. It is expected to reach SAR 4.091 trillion (USD 1.09 trillion) in 2024, SAR 4.352 trillion (USD 1.16 trillion) in 2025, and SAR 4.431 trillion (USD 1.18 trillion) in 2026, before peaking at SAR 4.718 trillion (USD 1.26 trillion) in 2027.
Source: Saudi Ministry of Finance, Statement from 9/30/2024
