Saudi Arabia’s Finance Minister has stated that the Kingdom will continue to invest in large-scale projects aimed at weaning the economy off of oil, and the Kingdom approved its state budget for 2025, predicting a fiscal deficit of 101 billion riyals (USD 26.88 billion).
The deficit, which would amount to roughly 2.3% of GDP, is consistent with an initial government estimate made in September 2024.
Saudi Arabia will keep making strategic investments in projects related to Vision 2030, the Kingdom’s ambitious plan to restructure its economy, according to Finance Minister Mohammed Al Jadaan.
Saudi Arabia’s revenue has been negatively impacted in recent years by declining oil prices and prolonged voluntary production cuts by the largest oil exporter in the world, but Riyadh is moving forward with a spending plan to spur growth and fulfil its economic transformation plan.
The same as in September, the total expenditure for 2025 is estimated to be 1.285 trillion riyals, which is expected to represent roughly 30% of GDP over the following three years.
The estimated total revenue is 1.184 trillion riyals. Vision 2030 seeks to lessen Saudi Arabia’s reliance on oil, but doing so will cost hundreds of billions of dollars to construct extensive infrastructure, establish new industries like manufacturing and tourism, and generate employment.
Crown Prince Mohammed bin Salman, praised “Vision 2030” reforms for creating “the positive indicators of the Saudi economy” in a statement released with the budget.
To focus on finishing the necessary components for hosting international athletic events over the next ten years, the Kingdom has recently lowered its ambitious plans for projects like the futuristic desert city of NEOM as costs associated with Vision 2030 skyrocket.
“NEOM is a long-term project that will take decades to complete,” FM Mohammed Al Jadaan said.
He also highlighted the strong performance of key economic indicators in the Kingdom, stating that nominal GDP surged by 64% from 2016 to the end of 2023, reaching around SAR4.1 trillion (USD 1.09 trillion).
While there have been significant drops in oil GDP affecting real GDP, the growth of the non-oil GDP has been a driving force behind the sustained expansion of the economy, with forecasts predicting a growth rate of 4.6% in 2025 and similar averages extending through 2027 and beyond.
The finance minister also noted that the Kingdom’s non-oil economy has seen impressive growth despite geopolitical obstacles. He remarked that Crown Prince Mohammed bin Salman highlighted the importance of maintaining fiscal sustainability and prudently managing public debt while noting the structural transformations achieved in the economy over recent years.
FM Mohammed Al Jadaan further emphasised that inflation is under control in Saudi Arabia, with rates at 1.7% in 2024, considerably lower than global averages, amid expectations that the ratio will remain below 2% in the medium term. The finance minister also highlighted the notable structural transformation in private investment’s contribution to GDP.
Since the launch of Vision 2030 in 2016, this contribution has risen by 2%, reaching 24.7% of GDP by mid-2024, reflecting the private sector’s confidence in the Kingdom’s economic reforms.