Lowering its growth forecast for 2023, Saudi Arabia expects to post a budget deficit this year rather than an earlier projected surplus, mainly due to ‘expansionary’ spending policies and ‘conservative revenue estimates’, reports Arab News.
Saudi Arabia will continue its fiscal and structural reforms as the kingdom is steadily embarking on its economic diversification journey in line with the goals outlined in Vision 2030, said Finance Minister Mohammed Al Jadaan.
He said that continuous implementation of the plan is necessary for the kingdom to catalyse its economic growth and maintain fiscal sustainability.
A preliminary budget statement issued on Saturday showed that the largest Arab economy expects real gross domestic product to grow by 0.03 per cent this year compared with a previous forecast for growth of 3.1pc.
The document also projected the government would post a budget deficit of 1.9pc of the gross domestic project in 2024, 1.6pc of GDP in 2025, and 2.3pc of GDP in 2026. It said “limited budget deficits” would continue in the medium term.
Meanwhile, total expenditure is seen rising to 1.262 billion riyals in 2023, from an earlier estimate of 1.114bn riyals, before slowing down marginally to 1.251bn riyals in 2024.
However, the kingdom’s debt-to-GDP ratio is expected to remain below 27pc due to a gradual decrease in the deficit over the coming years, Mazen Al Sudairi, head of research at Al Rajhi Capital, told Arab News.
“The (budget) deficit is expected to decrease gradually over the coming years, keeping the debt-to-GDP ratio below 27pc, well below the government’s target of 30pc,” the analyst said.
Al Sudairi said most of the deficit would be funded through borrowing, demonstrating prudent fiscal management.
According to the ministry, the government is now expecting an 82bn riyals ($21.8bn) deficit for 2023 instead of an 16bn riyals surplus projected earlier.
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