Saudi Arabia Prepares for Larger Budget Deficit Amid Economic Woes

Saudi Arabia has revised its fiscal outlook for 2024, projecting a larger budget deficit of SAR118 billion ($31.47 billion), equivalent to 2.9% of GDP. This surpasses the previous forecast of SAR79 billion ($21.07 billion) and reflects the kingdom’s commitment to economic growth and Vision 2030.

With reduced economic growth forecasts due to global challenges and lower oil production, Saudi Arabia aims to boost the non-oil sector, which showed promising growth in the first quarter of 2024. Finance Minister Mohammed Al-Jadaan describes the deficit as intentional as part of a broader strategy.

The kingdom plans to borrow to finance future deficits and requires oil prices of $96 per barrel to balance its budget. Despite ongoing fiscal challenges, Saudi Arabia aims to attract more foreign direct investment and diversify its economy, targeting $100 billion in FDI by 2030.

By prioritizing investments in key sectors and industries, Saudi Arabia seeks to reduce its reliance on oil revenues and create new job opportunities. The government’s long-term economic transformation plan balances immediate fiscal challenges with future growth investments, aligning with its Vision 2030 objectives.