Saudi Arabia’s deficit rises again as oil output cuts bite

FII

• Deficit hit $15bn in year to September
• Funding crunch for giga-projects
• Capital expenditure up 33%

Saudi Arabia’s budget deficit was SAR58 billion ($15.5 billion) in the first nine months of 2024, rising by SAR30 billion in the third quarter alone and confirming predictions of a funding crunch for the country’s giga-projects. 

The finance ministry said in October that it expects to post an overall deficit of SAR118 billion this year – 3 percent of GDP and 49 percent higher than the figure the government had predicted in its budget statement last December. It is also up on the SAR80.9 billion deficit recorded in 2023. 

Saudi Arabia’s total revenue stood at SAR956 billion for the first nine months of 2024, a year-on-year rise of 12 percent. Spending was just over SAR1 trillion in the same period, up 13 percent. Capital expenditure rose by 33 percent in the first nine months. 

The country’s GDP has taken a hit from the output cuts adopted by Opec+ over the past two years in an attempt to prop up global oil prices.

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The Saudi economy contracted by 0.8 percent in 2023, but the International Monetary Fund is predicting 1.5 percent growth this year and 4.6 percent in 2025 as the output cuts are phased out. 

The IMF expects oil prices to rise to about $81 a barrel by the year’s end, far below the $96 per barrel needed for Saudi Arabia to balance its budget. 

The oil price and low foreign direct investment have placed constraints on the country’s $1.25 trillion economic development plans – especially upcoming events such as the 2029 Asian Winter Games in the Neom resort of Trojena, the World Expo 2030 in Riyadh and the Fifa World Cup in 2034.