Saudi budget is focused on improving services and diversifying the economy 
Saudi Arabia’s budget results for Q2 and the first half of this year, recently released by the Ministry of Finance, revealed a financial deficit of SR15.3 billion ($4 billion) and SR27.7 billion, respectively.
Despite those deficits, the budget results reflect the Kingdom’s strong financial position, especially when considering that the government’s reserves total SR393.9 billion, and the current account totals SR101 billion for the six months ending June 30, 2024.
The government’s strong financial position has supported its generous spending on public services including healthcare, social development, education, municipal services, infrastructure, and transportation, which amounted to SR321 billion for the first half of this year, compared to SR277 billion for the same period last year, an increase of 16 percent.
This increase can be attributed to the government’s ongoing efforts to improve public services provided to citizens and residents in line with the Quality of Life Program, which aims to improve the standard of living for everyone in the Kingdom.
The government has also focused its spending on capital expenditure, which amounted to SR99 billion for the first half of this year, compared to SR69 billion for the same period last year, an increase of 43 percent. This significant rise in CAPEX is due to continuous government support for various strategic projects aimed at economic diversification in line with Saudi Vision 2030.
Despite the budget deficits in Q1 and Q2 of 2024, the government’s financial position remains very strong in terms of liquidity, and that supports its efforts to improve public services and diversify the economy in line with the Kingdom’s Vision 2030.
Total revenues amounted to SR353.6 billion in Q2 and SR647 billion in the first half of 2024, compared to SR314.8 billion and SR595.8 billion for the same periods last year, increases of 12 percent and 9 percent respectively.
Oil revenues came to SR394.9 billion in the first half of 2024, compared to SR358 billion in the same period last year, an increase of 10 percent.
Non-oil activities generated SR252 billion in the first half of 2024, compared to SR237 billion in the same period last year, up 6 percent.
According to the General Authority for Statistics, non-oil and government activities grew by 4.4 percent and 3.6 percent respectively in Q2 of 2024, while real GDP shrank by 0.4 percent compared to Q2 of 2023. In contrast, the seasonally adjusted real GDP increased by 1.4 percent in Q2 of 2024.
Significantly, oil revenues have improved this year, despite the Kingdom’s official voluntary oil cuts of 1.5 million barrels per day, in addition to the agreements made within OPEC+.
Public debt amounted to SR1,149 billion by the end of Q2 2024, reflecting an increase of 9 percent compared to SR1,050 billion at the beginning of the period. The majority of that debt — around 60 percent — is domestic.
The financing of the deficit for both Q1 and Q2 of 2024 was achieved through public debt, rather than the government’s reserves or the current account.
In summary, despite the budget deficits in Q1 and Q2 of 2024, the government’s financial position remains very strong in terms of liquidity, and that supports its efforts to improve public services and diversify the economy in line with the Kingdom’s Vision 2030.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
