Saudi budget deficit rises fourfold in Q1 2024

Alamy via Reuters

• Gap in first quarter hits $3.3bn
• Non-oil revenue up 9 percent
• PMI sentiment positive

Saudi Arabia recorded a budget deficit in the first quarter of 2024 of SAR12.4 billion ($3.3 billion), four times higher than a year ago – confirming a revenue squeeze that has raised doubts about the funding of some of the kingdom’s giga-projects. 

The Q1 deficit in 2023 was SAR2.92 billion, the finance ministry’s quarterly budget review said, and the projected deficit for the whole of 2024 is SAR79 billion. 

Total Q1 revenue of SAR293.4 billion was 4 percent higher than last year’s SAR280.9 billion, but expenditure was up 8 percent at SAR305.8 billion.

There was a 37 percent rise in subsidies, a 24 percent rise in social benefits and a 33 percent rise in non-financial asset costs. 

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Oil revenue rose 2 percent compared with Q1 2023 and non-oil revenue rose 9 percent. 

Total debt at the end of Q1 stood at SAR1.1 trillion, of which SAR450 billion was external. 

Saudi Arabia’s economy contracted 0.8 percent in 2023 after the government adopted a policy of oil output cuts in a bid to push up global oil prices. 

The government has forecast three years of budget deficits, causing delays to some of the giga-projects at the heart of its massive economic transformation plan. 

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Despite the Saudi budget deficit and slowing GDP growth, the kingdom’s non-oil private sector started the second quarter of 2024 on a positive note, according to the latest Purchasing Managers’ Index survey, published on Monday.

“This uptrend hints at an anticipated spike in the non-oil GDP, likely exceeding the 4.5 percent mark for this year,” said Naif Al-Ghaith, chief economist at Riyad Bank.

“Noteworthy is the surge in new orders and inventory expansion, indicative of a proactive response to mounting demand within the market.”