Saudi Arabia Releases its Pre-Budget Statement for FY2025, Expecting SAR 1,184bn Revenues
The Saudi Ministry of Finance announced on Monday, September 30, 2024, its Pre-Budget Statement for the fiscal year 2025, expecting total revenues of SAR 1,184 billion ($315,593 million), and total expenditures of SAR 1,285 billion ($342,527 million).
The Pre-Budget Statement is part of Saudi Arabia’s efforts to enhance transparency in public finance and promote public disclosure. It also reflects the Saudi government’s commitment to strengthening its financial position and promoting sustainability by implementing reforms.
Revenues and Expenditures
The Pre-Budget Statement projected a significant growth in economy that will boost revenues on the medium term. Therefore, it estimates that total revenues for FY2025 will reach SAR 1,184bn, with expectations to hit SAR 1,289bn by 2027.
Meanwhile, expenditures are expected to reach SAR 1,285bn in FY2025, with government spending amounting to SAR 1,429bn by 2027. These figures are driven by the Saudi government’s efforts to deliver Vision 2030’s objectives through implementing reforms.
According to the Statement, the government intends to focus its spending on specific projects and strategies in targeted sectors, while maintaining spending on essential services for citizens and residents.
GDP Growth
The Statement expected a growth in the real gross domestic product (GDP) by 0.8% in FY2024. This is a result of an estimated 3.7% rise in non-oil activities, such as tourism, entertainment, logistics, transportation and industry. The growth of these sectors has improved the quality of life and empowered the private sector.
The positive economic indicators in the first half of 2024, especially in private consumption and investment, bolster these projections. This positive growth rate will continue over the medium term.
Moreover, the Pre-Budget Statement noted that the real GDP will grow by 4.6% in FY2025, due to the increase in the GDP of non-oil activities.
Positive Indicators
According to the Statement, the strong performance of non-oil activities positively impacted the Labor Market indicators, leading to a 4.1% growth in Saudi employees in the private sector at the end of the second quarter of FY2024. This marks an increase of 92,000 employees compared to the same period of FY2023.
Furthermore, the Pre-Budget Statement pointed that the Consumer Price Index (CPI) for FY2024 could reach 1.7%. It expected inflation rates to remain stable over the medium term, owing to the Saudi government’s proactive measures to control prices.
Budget Deficit
The budget of FY2025 is projected to record a deficit of around 2.3% of the GDP. The Statement expected this deficit to continue at similar levels over the medium term due to the government’s spending policies that promote economic diversification and sustainable growth.
In order to meet the estimated financing needs of FY2025, the government borrowing activities will continue. Moreover, the market conditions could lead to more proactive financing to handle future debt principal repayment.
Supporting Economic Growth
As part of the Saudi government’s efforts to support economic growth, it aims to harness market opportunities to diversify financing channels to enhance market efficiency. This includes funding for capital and infrastructure projects, according to the Pre-Budget Statement.
The FY2025 budget aims to maintain Saudi Arabia’s fiscal position and its ability to address global challenges. It also prioritizes spending to maximize economic returns and gains. Furthermore, it aims to improve the quality of life through enhancing the quality of services provided to citizens and residents, in line with the objectives of Saudi Vision 2030.
On this occasion, the Saudi Minister of Finance, Mohammed Al-Jadaan, said: “The encouraging forecast for the Saudi economy in 2025 is an extension of the positive developments in its actual performance over recent years.”
He further added that “Saudi Arabia has demonstrated the strength of its fiscal position and the flexibility of its economy in the face of challenges, represented by safe levels of government reserves, acceptable levels of public debt, and a flexible spending policy.”
