Saudi Arabia announced Monday that it expects a budget deficit of around 2.3% of gross domestic product (GDP) in 2025, which is expected to widen in the following two years, due to increased spending and falling revenues. oil companies.
The Gulf monarchy, the largest economy in the Arab world, is engaged in a vast program of reforms aimed at reducing its dependence on black gold and focusing on the development of tourism and business.
“The 2025 budget is expected to record a deficit of around 2.3% of GDP, and remain at comparable levels in the medium term,” the Saudi Finance Ministry said in its preliminary projections.
The Ministry of Finance also expects budget deficits of 2.9% of GDP in 2026 and 3% in 2027.
This situation “results from the government’s adoption of a strategic expansionist policy to support economic diversification and sustainable growth”, explained the minister, forecasting an increase in public spending to around 1,285 billion riyals (342.6 billion dollars) in fiscal year 2025.
State revenue, on the other hand, is expected to fall by 4.3%, to around 1,184 billion riyals ($315 billion), leading to a deficit of 101 billion riyals ($26.9 billion), a- he continued, saying he was basing himself on “cautious estimates”.
Saudi Arabia, the world’s largest crude exporter, has carried out a series of production cuts since 2022 to reduce supply on the market and support prices. Its production now stands at around nine million barrels per day (bpd), well below its declared capacity of 12 million bpd.
Its national oil company, Aramco, saw its profits fall at an annual rate of 14.5% in the first quarter of the year, then by 3.4% in the second quarter.
The authorities forecast real GDP growth of 0.8% in 2024, “supported by the increase in non-oil activities of 3.7%”.
Under the leadership of the crown prince and de facto ruler of the kingdom, Mohammed bin Salman, Arabia has invested hundreds of billions in mega-projects like NEOM, a futuristic megacity in the middle of the desert, a ski resort or seaside resorts on the red sea.
ht/saa/bk
© Agence France-Presse
The Gulf monarchy, the largest economy in the Arab world, is engaged in a vast program…
