Saudi Arabia has increased its planned budgetary spending to SAR1,262 billion ($336.49 billion) from previously announced SAR1,114 billion ($297 billion) in its revised budget estimates for 2023.
The government expects total revenues to reach SAR1,180 billion (higher than earlier estimates). However, the budget is now projecting a SAR82 billion deficit for 2023 versus the surplus of SAR16 billion earlier due to the increase in spending.
Meanwhile, in its pre-budget statement for FY 2024, the ministry estimated total expenditures to reach SAR1,251 billion, and total revenues SAR 1,172 billion.
The ministry also estimates that a modest deficit will be recorded at about 1.9% of the GDP, with continued efforts to increase the efficiency of spending and fiscal consolidation, strengthen fiscal sustainability, and implement economic and fiscal reforms.
The pre-budget statement for FY 2024 reflects the proactive structural and fiscal reforms that the kingdom has taken to enhance its economy's ability to face economic developments and challenges, resulting in the positive performance of economic indicators, which has led to GDP growth at a continuous rate, the expansion and performance of the non-oil sector, and the increase of labor force, it said.
Saudi Minister of Finance Mohammed bin Abdullah AlJadaan said that the government will continue to implement fiscal and economic structural reforms to help develop and diversify the Saudi economy, and to increase economic growth while maintaining fiscal sustainability, which will be achieved by continued implementation of Saudi Vision 2030 initiatives and strategies.
He said that the positive forecast for the Saudi economy for FY 2024 is an extension to its performance since FY 2021, where the preliminary forecasts for economic growth rate for 2024 and the medium-term were revised, indicating a real GDP growth of 4.4% for 2024. This is supported by the growth of non-oil activities' with the expectation that the private sector will continue to drive economic growth in the economy, contribute to job creation, and improve trade balances.
The government and its private sector partners will continue to implement Saudi Vision 2030 programs and initiatives, sectoral and regional strategies and giga projects, and other economic activities to achieve positive growth rates during 2024 and in the medium-term.
According to the pre-budget statement, total revenues for FY 2024 are estimated to be SAR1,172 billion, reaching SAR1,259 billion in FY 2026. Total expenditures are estimated to be SAR1,251 billion in FY 2024, reaching SAR 1,368 billion in FY 2026.
AlJadaan noted that the government's FY 2024 budget is estimated to have modest deficits of 1.9% of GDP, reflecting the efforts to stabilise government revenues and the continuous investments to support a sustainable economic growth.
The Ministry of Finance publishes the pre-budget statement for FY 2024 as part of the government's existing methodology for developing the annual budget, placing it within a comprehensive fiscal and economic framework in the medium-term, to enhance the transparency, fiscal disclosure, and fiscal planning for the coming years.
The government’s budgeted revenues for 2023 are likely based on Brent of ~$82/bbl, an Al Rajhi Capital commentary said.
It said the oil revenues in 2023 could reach SAR749 billion led by Aramco’s recent hike in performance-linked dividend. "Nevertheless, we increase our expectations for non-oil revenues at SAR440 billion (versus the earlier estimates of SAR421 billion) as H1 2023 non-oil revenues have already surpassed that of H1 2022, led by traction in non-oil GDP growth," it said.
"Furthermore, as per IMF Country Report the non-oil GDP growth is expected to comfortably stay above the 4% mark in the near future. We believe this will underpin higher spending by the government going forward. Acceleration of spending (SAR1,262 billion versus SAR1,114 billion) can be regarded as a strategic move by the government and is reflective of its support towards the Vision 2030 target," said the Al Rajhi Capital report. -TradeArabia News Service