Saudi Arabia predicts budget deficit as it funnels money into gigaprojects

Saudi Arabia predicts budget deficit as it funnels money into gigaprojects

Saudi Arabia expects a budget deficit for this year and up to 2026 after revising earlier predictions of a surplus, as it funnels money into gigaprojects and expanding its non-oil economy.

In a preliminary budget statement for 2024 released at the weekend, the kingdom also pared its growth forecast for this year. It now predicts 0.03 per cent growth overall — with 5.9 per cent growth in the non-oil economy — after being among the world’s fastest-growing economies last year with almost 9 per cent GDP growth on the back of a petrodollar windfall.

The statement said total revenues this fiscal year, which runs from January to December, were expected to be SR1.18tn ($314bn), with expenditure estimated at SR1.26tn. Saudi Arabia is also expected to post a deficit next year and through 2026, revising past predictions of annual surpluses until then, while forecasting 4.4 per cent GDP growth next year.

Inflation and supply chain problems had hampered growth, the statement said, but “the government is working to expand government spending that has a transformative effect, while maintaining fiscal sustainability in the medium and long term”.

The world’s biggest oil exporter is undergoing reforms to diversify its economy beyond oil revenues, which are increasingly used