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Gov’t budget closed out FY2023 in deficit: The Kingdom recorded a budget deficit of c. SAR 80.9 bn last year with total government spending coming in at SAR 1.3 trn with revenues at SAR 1.2 trn, according to latest figures (pdf) by the Finance Ministry yesterday.
That’s narrower than government projections: The Finance Ministry had forecasted a deficit of SAR 82 bn for FY2023 — 2% of GDP — in one of its later estimates last year on the back of a lower crude production and global prices, according to the FY2024 budget statement (pdf). This marked a downward revision from earlier projections of a SAR 16 bn surplus in its FY2023 budget (pdf).
REMEMBER- Policymakers have accepted small deficits as the price of continuing to invest in growth: “We intentionally decided to spend more and cause the deficit. If you spend that money right, on productive assets, then it’s money well spent,” Finance Minister Mohamed Al Jadaan said in December during the FY 2024 budget forecast. He signaled it will continue to run deficits to support the “government’s strategic expansionary spending.”
But: The Kingdom is pacing out investment in some megaprojects so as not to block the private sector from liquidity it nerds to grow.
Revenues + gov’t spending is in line with forecasts: The government had penciled c. SAR 1.2 trn in revenues and c. SAR 1.3 trn in total expenditures for FY 2023, according to this year’s budget statement.
How oil fared: Oil revenues fell 12% y-o-y last year to SAR 754.6 bn, while non-oil revenues grew 11% y-o-y in the same period to SAR 457.7 bn, according to yesterday’s figures by the Finance Ministry.
SOUND SMART- The Finance Ministry had noted in its FY2023 budget statement that it has “prepared different scenarios for the revenues of FY2023, taking into account the global and domestic developments and the state of uncertainty regarding the ramification of the existing geopolitical conditions”.
What to expect in 2024: The budget deficit is expected to come in at SAR 79 bn by the end of FY2024, leaving the government short of SAR 86 bn in total financing needs, according to the latest figures (pdf) by the National Debt Management Center.
