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By Yousef Saba

Sept 30 (Reuters)Saudi Arabia expects to post a surplus of 0.2% of GDP in 2023, a drop from an expected surplus of 2.3% this year, which was revised downwards slightly, a preliminary budget statement showed on Friday, as it boosts spending amid a windfall from oil revenues.

Saudi Arabia expects total revenues at 1.123 trillion riyals ($298.99 billion) in 2023, an estimated 8.1% fall from this year, and total spending of 1.114 trillion riyals, the preliminary budget statement for 2023 said.

Projected spending was up nearly 17% from spending budgeted for this year, while revenues are expected to be 7.5% higher compared with 2022.

In its 2022 budget statement, the finance ministry had expected a budget surplus of 2.5% this year and 0.8% next year, both revised downwards.

The ministry expects its budget surplus to widen to 0.5% of GDP in 2024 and 1.7% in 2025, the 2023 preliminary budget showed.

Saudi Arabia’s expected surplus this year would be its first in nearly a decade, as it benefits from sustained high oil prices and higher volumes, as well as a growing non-oil economy.

Surpluses achieved “will be directed to bolstering government reserves, supporting the national funds and considering the possibility of accelerating the implementation of some strategic programs and projects of economic and social dimensions,” as well as to partly repay debt, the ministry said.

Saudi Arabia revised up its expected GDP growth this year to 8% from a previous forecast of 7.4%, before slowing down to 3.1% growth in 2023, slightly below a previous projection of 3.5%. Growth was forecast at 6% in 2024 and 4.5% in 2025.

Non-oil GDP growth is expected to grow 5.9% this year, the ministry said. Inflation this year “may be about 2.6%,” the finance ministry said.

The International Monetary Fund has projected GDP growth of 7.6% this year for Saudi Arabia.

The government, embarking on an ambitious economic agenda to diversify the economy away from oil, “aims to strike a balance between maintaining fiscal sustainability and accelerating the pace of economic growth,” the ministry said.

The kingdom is increasingly relying on its powerful sovereign wealth fund to drive an ambitious spending push on projects including a collection of lavish Red Sea resorts, a futuristic city in the desert and nearly $40 billion in investments in the gaming industry.

The head of the Public Investment Fund (PIF), which doubled its assets to more than $600 billion in about two years, said in December the fund would spend 1 trillion riyals domestically by 2025.

“The PIF is one of the pillars for economic diversification in the Kingdom, and it continuously aims to invest in several promising areas and sectors,” the ministry said.

($1 = 3.7560 riyals)

(Reporting by Yomna Ehab and Ahmed Tolba in Cairo; Writing by Yousef Saba in Dubai; Editing by Chris Reese)

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