Saudi Arabia’s Budget Deficit Nears $3.3 Billion in Q1 2024
In the first quarter of 2024, Saudi Arabia recorded a budget deficit of SR12.4 billion ($3.3 billion), representing 16 percent of the annual deficit forecast set by the Ministry of Finance. This aligns with expectations, showcasing the Kingdom’s progress in accelerating spending related to Vision 2030 implementation, alongside its careful fiscal management.
Boost in Non-Oil Revenues Drives Government Income Growth
The Ministry’s quarterly performance report revealed a 9 percent increase in non-oil revenues to reach SR293.43 billion, mainly due to higher taxes on goods and services. Taxes on goods and services surged by 11 percent to approximately SR70 billion, constituting nearly a quarter of total government revenues and approximately 63 percent of non-oil income.
Factors Driving Non-Oil Revenue Growth
Aside from taxes, the growth in non-oil revenue is also attributed to Other Revenues, which include income from various sources such as the Saudi Central Bank, sales from other entities, administrative fees, fines, penalties, and confiscations.
Oil Revenues Experience Slight Uptick
Oil revenues saw a 2 percent increase, reaching SR181 billion, although their percentage share of total government revenues decreased from 64 percent to 62 percent. This decrease can be linked to voluntary oil production cuts by OPEC+ members.
Government Expenditure on the Rise
Government expenditures surged by 8 percent, reaching SR305.82 billion, with non-financial capital expenditure leading the growth. The Ministry indicated increased spending to expedite key programs under Saudi Vision 2030.
Utilization of Goods and Services Drives Expenditure
Goods and services expenditure surged by 12 percent, reaching SR60.7 billion, accounting for 20 percent of total expenditure. Compensation of employees remains the largest expenditure category at 45 percent, reaching SR137.5 billion.
Deficit Covered Through Borrowing
The deficit will be entirely covered through borrowing, with domestic debt accounting for 60 percent and external debt for 40 percent of the end-of-period debt balance. Saudi Arabia’s public debt remains relatively low compared to advanced economies.
Robust Reserves Bolster Fiscal Stability
Government reserves totaling around SR392 billion in the first quarter provide a substantial buffer against potential financial challenges or economic downturns, enhancing the Kingdom’s fiscal stability and ability to meet financial obligations.