Arabian Post Staff -Dubai

Saudi Arabia has announced a fiscal budget for 2025 forecasting a deficit of approximately $27 billion, or 2.3% of its GDP, driven by extensive spending on mega-projects central to its Vision 2030 initiative. The projected revenues are set at $315 billion against expenditures amounting to $342 billion, reflecting a strategic choice to prioritize long-term economic transformation over short-term fiscal surpluses.
This marks a calculated shift from Saudi Arabia’s earlier efforts to achieve balanced budgets. Despite the deficit, fiscal policy remains expansionary to support initiatives like NEOM, the Red Sea Project, and other transformative ventures. These projects are designed to diversify the economy, reduce reliance on oil revenues, and stimulate private sector participation, aligning with Vision 2030’s objectives.
Saudi Arabia’s debt-to-GDP ratio is expected to remain manageable, with controlled debt growth underscoring the kingdom’s commitment to maintaining financial sustainability. The government has emphasized the use of reserves and prudent borrowing strategies to fund the deficit while ensuring resilience against economic volatility.
Rating agencies have responded favorably to these strategies, reflecting confidence in Saudi Arabia’s fiscal reforms. Fitch, Moody’s, and S&P Global Ratings have recently reaffirmed strong ratings for the kingdom, highlighting its structural reforms and the effectiveness of its fiscal policies. The government’s drive to modernize and digitize economic sectors has further strengthened its global economic position.
Oil remains a significant contributor to the economy, but ongoing fluctuations in global oil prices underscore the urgency of economic diversification. Saudi Arabia has bolstered its focus on sectors such as tourism, technology, and renewable energy to mitigate potential impacts of reduced oil revenues. These investments, while substantial, are expected to deliver long-term economic returns.
The fiscal outlook also reflects the kingdom’s strategic investments in enhancing infrastructure and social services, with education, healthcare, and digital transformation among key priorities. Analysts suggest that such investments, coupled with policies aimed at attracting foreign direct investment, will bolster the non-oil GDP growth rate, supporting broader economic stability.