Despite a drop in oil prices on international markets, the kingdom is continuing its policy of increasing spending, particularly as part of its economic diversification objectives through the Vision 2030 plan.
This strategy, although necessary, widens the budget deficit, forecast at 118 billion riyals ($32 billion) in 2024, or 2.9% of GDP.
The main challenge for Saudi Arabia remains its dependence on oil revenues, which represent a considerable part of its budget. According to the International Monetary Fund (IMF), the kingdom needs a barrel of nearly 100 dollars to balance its accounts, a difficult objective to achieve in the current context of reduced production and lower than expected prices.
However, the Saudi government is banking on a gradual recovery of the oil market, with a GDP growth forecast of 0.8% in 2024, accelerating to 4.6% by 2025, in particular thanks to an expected increase in oil production. oil.
Despite these challenges, the financial forecast for 2024 reflects the importance of the oil sector to the national economy. Revenues are expected to reach 1.24 trillion riyals, while public spending is expected to amount to 1.36 trillion riyals, further accentuating the budget deficit. For 2025, revenues are estimated at 1.18 trillion riyals, while expenditures will continue to increase to 1.29 trillion riyals.
Riyad Bank Chief Economist Naif al-Ghaith emphasized: “We have more income than expected… it’s in expenses that the increase occurred“, indicating that despite falling oil revenues, the kingdom has chosen to invest more, particularly in long-term projects aimed at preparing for the post-oil era.
At the same time, non-oil activities, which have supported growth in recent years, are expected to slow in 2024, with growth forecast at 3.7% compared to an average of almost 6% over the previous three years. This slowdown highlights Saudi Arabia’s still marked dependence on its oil sector, despite its diversification efforts.
The economic future of Saudi Arabia therefore remains closely linked to the evolution of oil prices, the stabilization of which will be essential to ensure a balanced budget while pursuing the ambitions of the Vision 2030 plan.
(c) Afp
Commenter Vision 2030 and oil prices below $100: Saudi Arabia in search of budget balance
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