Saudi Arabia forecasts budget deficit of $27bn in 2025

Revenue expected to be $314bn, while expenditure is projected at $344bn

The Digital City development in Riyadh. Saudi Arabia has announced a host of ambitious new projects as part of the overarching economic agenda. Bloomberg

Saudi Arabia on Tuesday approved the country’s general budget for the 2025 fiscal year, forecasting a total deficit of 101 billion Saudi riyals ($27 billion), as the kingdom continues to spend on reforms aimed at transitioning the economy away from oil.

The deficit will account for about 2.3 per cent of the country’s gross domestic product, the Ministry of Finance said. It is in line with the government’s initial projection in September, while down from a 2024 deficit of $30.6 billion, or 2.8 per cent of GDP.

Total expenditure for 2025 is projected at 1.285 trillion riyals, while total revenue is expected at 1.184 trillion riyals, the ministry’s budget statement said.

Saudi Arabia's Crown Prince Mohammed bin Salman directed ministers and officials “to commit, each in his capacity, to implementing the programmes, strategies, and development and social projects included in the budget, consistent with the goals of the kingdom’s Vision 2030”, the Saudi Press Agency said.

The Arab world’s largest economy and Opec’s top oil producer is pushing to diversify its economy away from oil under Vision 2030, launched in 2016. It also aims to support private-sector growth and reduce the unemployment rate among citizens. The kingdom has announced ambitious new projects as part of the overarching economic agenda, such as Neom and the Red Sea Project.

Saudi Arabia estimates its economy to expand by 0.8 per cent this year, supported by a 3.7 per cent growth in its non-oil sector, according to the latest data from the Finance Ministry.

While announcing the budget, Mohammed bin Salman emphasised the role of government spending in diversifying the kingdom’s economy by focusing on empowering promising sectors, boosting the investment environment, and stimulating industries, according to the SPA report.

He also highlighted the efforts to enhance the private sector’s role in contributing to investment projects.

He added that the Saudi economy is subject to global developments, like any other economy, and this “necessitates continuous efforts to address global challenges, through long-term financial planning”.

“The focus remains on achieving and implementing programmes and initiatives while committing to efficient spending, and ensuring the meticulous and transparent execution of all budget items,” he said.

Saudi Arabia is projected to have the second-fastest GDP growth rate among major economies next year, estimated at 4.6 per cent, SPA report said. The growth is fuelled by the increasing contribution of non-oil activities, which reached a record 52 per cent in 2024, it added.

Meanwhile, the unemployment rate for Saudis fell to a historic low of 7.1 per cent by the second quarter, nearing the Vision 2030 target of 7 per cent, the ministry said. It added that the participation rate of Saudi women in the labour market rose to 35.4 per cent until the second quarter, surpassing the vision’s goal of 30 per cent.

Saudi Finance Minister Mohammed Al-Jadaan said that the government’s continued efforts to develop the labour market contributed to providing quality jobs, which led to a decline in the unemployment rate among Saudis to its lowest historical level.

Funds play a key role

The Crown Prince on Tuesday emphasised the vital role of Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, and National Development Fund, as well as other development funds, in “supporting economic stability and driving comprehensive development”.

“These funds are pivotal to diversifying the kingdom’s economy and fostering investment, to achieve the objectives of Vision 2030,” SPA quoted him as saying.

The PIF continues to develop giga-projects which contribute to the economic transformation, and attract domestic and international investment across various strategic sectors. The wealth fund aims to boost assets under management to more than 4 trillion riyals by the end of 2025, according to the budget statement. As of October, PIF’s assets stood at 3.47 trillion riyals, the statement said.