Saudi Arabia Projected to Widen Fiscal Deficit for 2024 Amid Vision 2030 Economic Expansion

Saudi Arabia's 2024 fiscal deficit is expected to widen to 2.9% of GDP as spending increases to fuel growth and meet Vision 2030 objectives, despite lower oil prices. The government forecasts real GDP growth of 0.8% this year, accelerating to 4.6% in 2025, partly due to increased oil production.

Saudi Arabia's fiscal deficit for 2024 is projected to widen to nearly 3% of GDP, according to a government statement released on Monday. This increase in deficit is attributed to escalated spending aimed at bolstering growth and achieving the goals set out in the Vision 2030 economic transformation plan.

Despite experiencing lower oil prices and voluntary production cuts, Saudi Arabia continues to ramp up spending, expecting a deficit of 2.3% of GDP for 2025. Naif al-Ghaith, chief economist at Riyad Bank, remarked, "We have more revenues than expected, but the increase in spending has caused the wider deficit."

The kingdom is undergoing a significant economic overhaul aimed at reducing its dependency on oil, necessitating vast investments in new economic sectors. The IMF estimates that Saudi Arabia needs oil prices at nearly $100 per barrel to balance its budget. The government predicts that real GDP will grow by 0.8% this year, with an anticipated sharp rise to 4.6% in 2025, driven in part by increased oil production.

(With inputs from agencies.)