Saudi Arabia expects the deficit to increase to 3% of GDP in 2024

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Authors: Pesha Magid, Hatem Maher and Jaidaa Taha

RIYADH, Sept 30 (Reuters) – Saudi Arabia estimates its budget deficit will rise to almost 3% of GDP in 2024, a government statement showed on Monday, as it ramps up spending to boost economic growth and meet the goals of its economic transformation plan. Vision 2030″.

The preliminary budget statement shows that the kingdom expects a budget deficit of 118 billion rials ($32 billion) this year, representing 2.9% of GDP.

than the 79 billion rials forecast in the December 2024 draft budget.

Despite lower oil prices and voluntary cuts in oil production, Saudi Arabia, the world’s largest oil exporter, continues to increase spending. It expects the deficit to amount to 2.3% of GDP in 2025.

“We have higher revenues than expected… the increase has been in expenses,” said Naif al-Ghaith, chief economist at Riyad Bank.

Saudi Arabia is in the midst of a massive economic reform known as Vision 2030 that aims to end its dependence on oil, requiring hundreds of billions to develop new economic sectors and more sustainable sources of income.

According to estimates by the International Monetary Fund (IMF), the Arab world’s largest economy needs oil prices of almost $100 per barrel to balance its budget.

On Monday, the government forecast that real GDP will return to growth of 0.8% this year after last year’s contraction. GDP growth is projected to accelerate rapidly to 4.6% in 2025, partly due to increased oil production.

Total revenues are expected to be 1.24 trillion rials and government spending in 2024 is estimated at 1.36 trillion rials. In December, this year’s revenues were budgeted at 1.17 trillion rials and expenditures at 1.25 trillion rials.

The government projects revenues of 1.18 trillion riyals and expenditures of 1.29 trillion riyals in 2025, with spending likely to be around 30% of GDP over the next three years.

In a statement on Monday, the government estimated growth in non-oil activities at 3.7% in 2024, from an average of almost 6% over the past three years.

($1 = 3.7513 rials) (Writing by Rachna Uppal; Editing by Toby Chopra)