Saudi Arabia Records Budget Deficit in Q2 2024
In the second quarter of 2024, Saudi Arabia recorded a budget deficit of SR15.34 billion ($4.09 billion), bringing the year’s first-half shortage to 35 percent of the annual forecast set by the Ministry of Finance.
Lower-Than-Expected Deficit Indicates Fiscal Shift
The latest data suggests that the Kingdom is experiencing a lower-than-expected budget deficit for the year so far, hinting at a shift in fiscal management or higher revenues than initially anticipated in the first half of 2024.
Revenue and Expenditure Increase
The ministry’s quarterly performance report also revealed a 12 percent increase in revenues compared to the same period last year, totaling SR353.59 billion. Meanwhile, expenditures rose by 15 percent, reaching SR368.93 billion.
Rise in Oil Revenues Despite Production Cuts
Despite production cuts imposed by OPEC+ and additional reductions by the Kingdom, the second quarter of 2024 saw an 18 percent increase in oil revenues compared to the same period last year, totaling SR212.99 billion. Non-oil receipts also rose by 4 percent, reaching SR140.6 billion.
Diversification Efforts Drive Non-Oil Revenues
Taxes on goods and services made up 50 percent of non-oil revenues, totaling around SR70 billion. Other sources of revenue include taxes on income, profits, and capital gains, reflecting the Kingdom’s efforts to diversify its income sources beyond oil.
Focus on Diversifying Economy
Saudi Arabia is actively working to diversify its economy through investments in non-oil industries such as tourism, entertainment, and renewable energy. Initiatives like Vision 2030 aim to reduce oil dependency and promote a more diverse and sustainable economic landscape.
Expenditures and Fiscal Management
Non-financial capital expenditure saw a significant increase, totaling SR66.41 billion, driven by investments in physical assets to enhance the Kingdom’s capacity and capabilities. The quarterly deficit remains within expectations, reflecting prudent fiscal management.
Deficit Covered Through Borrowing
The ministry’s report indicated that the deficit will be covered through borrowing, with domestic debt comprising 59 percent and external borrowings making up the remaining 41 percent. Saudi Arabia’s public debt as a percentage of GDP remains relatively low compared to advanced economies, supported by government reserves.