RIYADH: Saudi Arabia’s preliminary budget for 2024 not only signifies its commitment to structural reforms but also indicates that the country’s gross domestic product is on track to exceed the SR4 trillion ($1.1 trillion) mark for five consecutive years until 2026.
In an analysis featured in Independent Arabia, Ghaleb Darwish, an economist and journalist, attributed the growth to robust government spending with a focus on non-oil sectors as part of its economic diversification plans.
In a significant milestone, the Kingdom crossed the GDP threshold for the first time in 2022, reaching SR4.156 trillion. Building on this momentum, analysts predict a GDP of SR4.136 trillion in 2023, SR4.26 trillion in 2024, and SR4.5 trillion in 2025, ultimately culminating in SR4.8 trillion by 2026.
However, this optimistic economic trajectory is not devoid of challenges. The backdrop of increased spending combined with reduced oil production has led Saudi Arabia to anticipate a budget deficit.
Contrary to earlier expectations of a fiscal surplus, the Kingdom foresees a deficit nearing 2 percent for the current fiscal year. In continuation, the preliminary 2024 budget statement alludes to an expected deficit of approximately 1.9 percent of the GDP.
Total expenditures for the forthcoming year are likely to reach approximately SR1.25 trillion. In contrast, revenues are projected at SR1.17 trillion.
Saudi Arabia augmented its expenditures for the current year by an estimated 13 percent, compared to the figures announced at the outset of 2022.
In an interview with Independent Arabia, Saudi economist and financial researcher Mohammad Al-Shemimri said there is an ongoing disagreement among economists about whether the deficit is a negative thing in Saudi Arabia’s budgets, even if the trend continues for many years.
He added: “This deficit may not affect the country’s economy if its levels are controlled, and also if it is caused by increased spending to enhance economic growth and spending on infrastructure, health and education.”
The revised spending now stands at SR1.26 trillion, a significant leap from the initial projection of SR1.11 trillion.
In terms of revenue, the 2023 forecast stands at SR1.18 trillion, a favorable increase from the previous estimate of SR1.13 trillion.
Ahmed Al-Shehri, an economist, said: “When looking at the expected deficit next year, we must take into account that the government budget reflects a balance between revenues and expenditures, and can be affected by many factors such as oil prices and global economic shifts.”
Furthermore, the Kingdom remains unwavering in its dedication to its social support framework. Such initiatives aim to safeguard Saudi citizens from potential financial impacts on both the domestic and international fronts, Darwish added.
This protective stance also extends to ensuring a steady supply and affordability of essential imported goods and services.