The Saudi Ministry of Finance has released its pre-budget statement for the 2025 fiscal year, forecasting a deficit of 2.3% of GDP, as the Kingdom continues to focus on strategic transformational spending to achieve economic diversification and sustainable growth.
The statement also amended its 2024 projections, including a real GDP growth of 0.8%, a reduction from its previous forecast of 4.4%. The increase in non-oil activities and a reduction in interest rates are anticipated to stimulate demand, potentially benefiting economic growth. According to official figures, inflation is expected to reach around 1.7% by the end of 2024.
Revenue and expenditure projections
The statement projects total expenditures at SAR1,285 billion ($346.95 billion) and total revenues at SAR1,184 billion ($319.68 billion) for 2025. It also predicts a GDP deficit of 2.9% in 2026.
Looking at 2027, the Kingdom’s Ministry of Finance has projected total expenditure to reach SAR1,429 billion (approximately $382 billion), while revenues are set to reach an estimated SAR1,289 billion (about $344 billion) in the next three years. The budget deficit for 2027 is predicted at 3% of GDP.
The non-oil economy was identified as a key driver of growth, with advances in tourism, entertainment, transportation and logistics. In 2024, growth in non-ol achitivies is expected to reach 3.7% of GDP. This growth has improved living standards, empowered the private sector, and reduced unemployment to historic lows, as well as helped achieve positive reviews from international organisations and credit rating agencies.
Government priorities
The Saudi Arabian Minister of Finance HE Mohammed Aljadaan emphasised the government’s focus on targeted spending for essential services to citizens and residents.
He noted that the Saudi economy is expected to record positive growth rates during 2025 and over the medium term, as a result of the continuation of the reforms, strategies and projects of Saudi Vision 2030. This will continue to contribute to the diversification of the economic base, enhancing the role of the private sector, and growing promising sectors, which supports increasing business opportunities and creating more jobs.
He clarified that the Kingdom’s government adopts a long-term fiscal planning methodology to ensure focus on maintaining strategic transformational spending, which is aimed at achieving economic gains and sustainable growth.
Borrowing and financing strategies
The Minister indicated that the government plans to continue borrowing, aligning with the approved annual borrowing strategy. The borrowing aims to finance the anticipated budget deficit and repay due debt in FY 2025.
The public debt portfolio is expected to “increase in a deliberate manner”, ensuring sustainability and supporting expanded spending to expedite critical programmes and projects aligned with Saudi Vision 2030.
Economic outlook
Aljadaan noted that the optimistic outlook for the Saudi economy in 2025 builds on positive trends observed in recent years.
The Pre-Budget Statement anticipates a 4.6% growth in real GDP, reflecting the Kingdom’s dedication to executing ambitious strategies and achieving sustainable development, thereby enhancing investor confidence and elevating the Saudi economy’s standing both regionally and globally.
