Riyadh (UNA/SPA) - Minister of Finance Mohammed bin Abdullah Al-Jadaan stressed that the directives of the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud were very clear to ensure the implementation of the budget according to its allocations, and to ensure its implementation with high efficiency, referring to the statement of Prince Mohammed bin Salman bin Abdulaziz, Crown Prince and Prime Minister, in which he spoke about the role of the budget in providing services to citizens, improving these services, increasing business and job opportunities for male and female citizens, empowering the private sector, and ensuring the existence of very clear programs to implement strategies.
This came in a press conference held by His Excellency today in Riyadh on the occasion of announcing the state's general budget for the fiscal year 1446/1447 AH (2025 AD), indicating that His Highness the Crown Prince clearly confirmed the ability of the Saudi economy with very high efficiency to face the challenges that we see around us in the world with high efficiency.
He said: “We have witnessed, as His Highness the Saudi Crown Prince mentioned, a distinctive growth in the non-oil economy despite all the geopolitical challenges around the world. His Highness stressed the importance of supporting public finances and their sustainability, and the importance of managing public debt wisely and successfully, and the Kingdom’s plans during the current year and previous years to achieve very wonderful structural changes in the economy.”
Regarding the economic aspect and economic developments, Al-Jadaan added, “The economic indicators in the medium term are optimistic indicators and build on what came before, as we talked in the last conference about the nominal GDP and the levels it reached with very significant growth during the period from 2016 to the end of 2023, as it continued to grow by 64% to approximately four trillion and one hundred in the nominal GDP.”
He pointed out that despite the very large decline in the oil GDP, the real GDP has helped the growth and continuation of the growth of the GDP, and this growth will continue next year to levels of 4.6% and an average within these limits in the medium term until 2027 and beyond, God willing.
The Minister of Finance confirmed that inflation in the Kingdom is under control despite its global rise, and the continuation of this inflation, as we reached 1.7 this year. It is expected that the inflation level will continue in the coming years in the medium term to be less than 2%.
He focused on structural change due to its utmost importance and the contribution of private investment to the GDP, as changing it in all countries takes a very long time and changes slowly and is difficult to change in a short period, indicating that in the period from 2016, from the launch of the Kingdom’s Vision 2030 until today, there has been a distinct change in this percentage by 52%, to reach 2024% of the GDP in mid-24.7, and this structural change reflects the confidence of the private sector in what is happening in the Kingdom’s economy.
He explained that the expectations for the non-oil GDP for the year 2024 by the end of the year are expected to reach 3.7%, and these changes reveal the results of work over the past six or seven years of strategies that are being efficiently implemented for very large amounts spent from the public finances and for very large spending from the private sector as well to exploit the economic opportunities that resulted from Vision 2030 and the opportunities that followed in the economy.
Regarding the expectations for the closing of the year 2024, the Minister of Finance stated that he expects that we will end with a spending level of around one trillion, three hundred and forty-five billion, and a revenue level of around one trillion, two hundred and thirty billion riyals, and a deficit estimated at approximately one hundred and fifteen billion riyals. These numbers mean that the government has continued its expansionary spending focused on sectors that have an impact, firstly, that touch citizens, and secondly, a direct impact on the economy, which creates job opportunities and business opportunities for citizens, both male and female, as we have seen very large leaps.
“If we look at the statistics of establishments or the statistics published by the General Authority for Statistics, we will find very large leaps in the size of small and medium enterprises that have exploited the opportunities created by this economic cycle and government spending. These numbers reflect another fact, which is that the budget numbers continue to be conservative numbers. For the fourth and fifth consecutive year, we end up with total revenues higher than what was planned in the budget when we announced it last year. This indicates that the government always takes the precautionary side when estimating revenues, whether oil or non-oil revenues, and that the results of spending during the year also enhance the economic cycle and thus grow non-oil revenues,” he said.
He added, "We will continue to do so, God willing, in next year's budget, and God willing, we will see increasing growth, whether in oil or non-oil revenues or in economic indicators."
Regarding the coming year, Al-Jadaan confirmed that the 2025 budget increases in spending by about 2024% over what was announced in the 2.7 budget, and the total expected spending will be around one trillion, two hundred and eighty-five billion, expecting revenues to be around one trillion, one hundred and eighty-four billion, and the deficit to be around 101 billion riyals. These numbers mean the continuation of a planned expansionary approach by the government to improve services provided to citizens, raise the level and quality of services, expand these services, and focus on strategies with an effective economic impact on jobs, business opportunities, and the sustainability of the Saudi economy, and complete projects that began in previous years, God willing, to link the economic system together, whether from a technical or infrastructure perspective.
Al-Jadaan explained that spending on sectors, which highlights that 526 billion of next year’s budget will be spent on the education, health, social development, and municipal services sectors, which is a pivotal focus of the directives of the leadership of this country.
He explained that the distribution of sectors takes into consideration where the focus of strategies and projects that have an impact on the country, on the citizen, on business opportunities and on the sustainability of this economy, God willing.
Regarding the medium-term revenue side, he stated that the revenue side of the government’s budget announcements always takes the conservative side, and we expect revenues for the year 2026 to be in the range of one trillion and one hundred and ninety-eight billion, and we expect revenues for the year 2027 to be in the range of one trillion and two hundred and eighty-nine billion riyals, and we will continue our approach of using these revenues in a way that benefits this country, its citizens, the services provided to them, the business opportunities created by the economy, and the job opportunities that the economy as a whole also creates.
Regarding expenditures, he stated that expenditures are expected to grow in the medium term to reach 429 trillion and 2027 riyals in XNUMX, as this is part of the long-term financial planning that the government has been working on for months and years to reach a financial planning that is closer to accuracy, highly efficient and reaches a stage of maturity in terms of spending priorities, spending efficiency, and financing strategies that have an effective and sustainable impact on the economy.
He noted that investing in citizens and the services provided is an investment in the economy and an investment in the future of the Kingdom’s people to sustain its economy.
Regarding the budget deficit, His Excellency Al-Jadaan pointed out that the planned budget deficit will continue in the medium term, reaching about 140 billion riyals in 2027, noting that the Ministry of Finance is conservative in its estimates of revenues, as it has included in the budget statement published on the Ministry’s website a set of scenarios for revenue estimates, in which the deficit may decrease if some scenarios are realized, but as a precaution, it always takes the conservative side in estimating revenues and thus deficit estimates.
He spoke about a number of important points that were not previously raised in the budget presentations, pointing to structural changes in the economy that require years to see their results, and which have already begun to appear, indicating that spending is increasing by about 33% annually on qualitative projects, strategies with an impact, and programs to achieve the Kingdom’s Vision 2030, indicating that spending on these areas has witnessed an increase of 38% annually since the launch of the vision, and this growth is expected to continue, as the largest part of expansionary spending is allocated to these projects and strategies.
He explained that this expansion in spending contributed to increasing the contribution of non-oil activities to the gross domestic product, from about 47% in 2016 to about 52% by the first half of 2024.
He explained that these structural changes, such as the construction of economic cities and major infrastructure projects, take years to fully show their results, as some projects are still in the completion stage.
He spoke about the 154% increase in non-oil revenues since 2016, reaching 472 billion riyals, noting that this increase means that the Saudi economy is less affected by oil price fluctuations than before, which ensures stable spending and sustainable economic growth.
Al-Jadaan stressed the pivotal role of private investment, whose contribution to the GDP rose to 24%, compared to the oil sector’s contribution of 28%, pointing to the importance of non-oil exports in creating an economic sector capable of international competition, increasing high-quality jobs, and improving the balance of payments by increasing foreign cash flows.
Regarding the labor market, His Excellency stated that the number of Saudi workers in the private sector increased by 23% from 2016 to mid-2024, reflecting a significant expansion in private sector businesses.
He praised the growing role of the tourism sector, which has become the second largest contributor to the balance of payments after oil, with revenues reaching 48 billion riyals by the end of 2023, and is expected to exceed this figure in 2024, stressing that the transformation of tourism from a sector that imports foreign currencies to a sector that exports them represents a major strategic success.
Al-Jadaan explained that the government is focusing in the medium term on completing major projects that include transportation, quality of life, and health. These projects include: King Salman Park, the Sports Track, and the Red Sea, Qiddiya, Neom, and Diriyah projects, all of which contribute to achieving the goals of the Kingdom’s Vision 2030.
The Minister of Finance touched upon the fact that strategies are one of the most important points that led to structural changes in the Saudi economy, indicating the continued support and focus on them, explaining that the sectoral and spatial strategies are the strategies for the regions of Makkah Al-Mukarramah, Asir Region, the Northern Region, Riyadh Region, the Eastern Region and the rest of the regions of the Kingdom.
During the press conference, he discussed sectoral strategies, touching on the five most prominent sectors that are being focused on, with the industrial sector at the forefront, which is the most important sector, which meets several axes, including national security, employment capacity, export and competitiveness capacity, in addition to the balance of payments, and the extent of the ability to raise the level of exports that is reflected in increasing support for the balance of payments. His Excellency also touched on the aspects of exports, through which imports are replaced through investment and consumption of the local product, in addition to export and international competition in a way that enhances the quality of the local product.
The Minister of Finance also highlighted the role of the tourism sector and its impact on the GDP of the state budget, considering the tourism sector as the largest sector that has the ability to create many jobs, in addition to its ability in the balance of payments, through the projects being implemented, and across the entire sector, as well as providing basic services to some tourism projects around the Kingdom, and within the framework of strengthening a very important sector for the economy to create business opportunities and jobs.
In his speech, the Minister of Finance addressed the transportation and logistics sector, stressing that the industrial sector cannot be effective without being supported by a logistics sector that can transfer this industry outside the Kingdom or to buyers inside the Kingdom, considering the transportation and logistics sector as one of the most important sectors that can support many other sectors, stressing that the transportation and logistics sector has a direct benefit in creating logistics areas to exploit the Kingdom’s central position on three continents and in the world, pointing out that the Ministry of Transportation and Logistics plays an active role in ports, airports, roads, and railway services, in addition to logistics areas.
He touched on the energy sector in its broad sense, the renewable energy sector, gas, gas networks and their delivery to industrial areas around the Kingdom, desalination plants, power plants and major factories around the Kingdom, and renewable energy supply chains.
His Excellency the Minister of Finance confirmed that the Ministry of Defense has begun implementing the ten-year plan, indicating that military spending is followed by the localization of these industries in the Kingdom, and the ambition is very great in localizing military industries.
He added that the coming period will also witness a focus on the Vision 2030 programmes, stressing that many achievements have been made regarding the vision programmes.
In response to a journalist’s question about the Kingdom’s continued budget deficit despite rising revenues and notable growth in the non-oil sector and future plans in this regard, His Excellency touched on the debt ceiling and looking at public finances in a broader framework, referring to revenues, expenditures, financing methods and borrowing.
“If the return on your spending on debt is going to be higher than the cost of that debt, then we should look at borrowing instead of cutting spending like any other investment on a personal level or even on a corporate level,” Al-Jadaan said.
He added: “Debt levels in the Kingdom are still lower than most G20 countries, and we have the capacity according to the debt plan to borrow for the coming years, and to absorb very acceptable deficit levels as a percentage of GDP.”
Regarding the file of land removals and compensations, and their repercussions on the budget, His Excellency confirmed that they are only done for the public interest in accordance with the system, and those responsible for evaluating the properties that will be removed are licensed by an independent body, which is the Evaluation Authority, according to those qualified in this field, who take into account the value of the property as land and whether it is residential, commercial, its location, and also the buildings that are built on it and their type, and they also take into account the impact on the property owner. He stated that the government has allocated very large sums to compensate the owners of slums, including owners who do not have official deeds, taking into account and appreciating the situation of the citizens who own these buildings, as in the year 2024 approximately fifty-five billion were disbursed in compensation.
Regarding the Saudi government’s offering of Aramco shares in the financial market, he said that a set of goals have been achieved, including those related to transparency and disclosure, and a part related to liquidating some of these assets and using them to support what is happening in the economy for the Public Investment Fund.
He explained that through this offering, it was possible to transfer shares equivalent to approximately 16% of Aramco’s shares to the Public Investment Fund or its subsidiaries, which strengthened its financial capacity, whether through the dividends it receives or even its ability to borrow, adding that there are currently no specific plans to transfer more shares to the Public Investment Fund, and any transfer will be announced in due course.
Regarding public finance, he pointed out that it obtains three sources of revenue from oil, which are from Aramco (rent), and rent is a commonly known international percentage taken and amounts in the Kingdom to 15% of the company’s sales apart from profits. The second source comes from oil through Aramco, which is taxes. Aramco, according to the system, pays the government 50% of its profits as taxes. This element also comes to us periodically every three months to the treasury to also finance expenses as part of the revenues. The third source comes from oil, which is profits, as it depends on ownership.
He said: “Apart from our ownership of Aramco shares, we will get 100 percent of the revenue and 100 percent of the taxes. What will be reduced is according to the percentage that was transferred, whether to the fund or to the public in the financial market. It is only a part of the profits, and we still get eighty-four or eighty-three percent of the profits.”
He explained that the support provided by the government is not limited to direct social support such as social security and the citizen account, but rather includes basic services provided free of charge to citizens, including health, education, security and infrastructure, noting that the budget for service sectors amounted to 260 billion riyals for health, 200 billion riyals for education, and 121 billion riyals for security, stressing that this support is national and a fundamental pillar of the Kingdom’s system.
He pointed to the efforts to raise the efficiency of social support and ensure that it reaches those who deserve it through continuous reforms that include restructuring the social security system, extending the Citizen Account program until the end of 2025, and other initiatives aimed at improving the economic and social impact of support.
Al-Jadaan stressed the distinction between public finance and the Public Investment Fund, explaining that projects such as NEOM, Qiddiya and the Red Sea are implemented through companies owned by the fund with budgets independent of the state’s public finance, stressing that all major projects have clear plans and strategies with periodic reviews that ensure their implementation with high efficiency, and that there is no strategic project that is not funded until 2030.
His Excellency stressed that the Kingdom has been able to maintain low inflation rates compared to other countries over the past years, citing the freezing of energy prices and ensuring the availability of basic commodities as examples of government measures, explaining that the government is constantly working to achieve a balance between spending efficiency and continued development, to ensure that major economic projects are not affected.
He pointed out that the government continues to support citizens to mitigate the impact of inflation, citing the extension of the Citizen Account program and the continued payment of large sums to stabilize fuel prices, stressing that the government is continuing its efforts to ensure price stability and reduce the economic burden on citizens.
His Excellency the Minister of Finance concluded the conference by thanking the wise leadership for its great support for development and economic efforts, expressing his pride in the efforts of security personnel and government employees in various sectors to achieve the goals of the Kingdom’s Vision 2030, as he stressed that collective work by citizens and government agencies is the basis for continued success in achieving prosperity and growth for the Kingdom.
(is over)
