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The state budget closed with a SAR 15.3 bn deficit in 2Q 2024, widening from SAR 12.4 bn in the previous quarter, according to the Finance Ministry’s quarterly budget performance report (pdf). Total government revenues grew 12% y-o-y to SAR 353.6 bn during the quarter, driven by an 18% increase in oil revenues and 4% in non-oil revenues.
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On a 1H basis: The Kingdom recorded a budget deficit of SAR 27.7 bn in 1H 2024, with expenditures coming in at SAR 674.8 bn and total government revenues closing at SAR 647 bn in the first half of the year. Public debt stood at SAR 1.15 tn during the six-month period, split into SAR 680.3 bn domestically and SAR 468.9 bn externally.
BACKGROUND- It’s the name of the game: 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 the treasury will continue to run deficits to support the “government’s strategic expansionary spending” even as it paced out some components of select gigaprojects. Some officials have taken to calling gigaprojects modular and Neom has gone on a drive to underscore to contractors and bankers that everything is on track.
THE BREAKDOWN-
Total expenditures for 2Q 2024 rose 15% y-o-y to reach SAR 368.9 bn, with most sectors seeing considerable growth in public spending aside from grants, which fell 50%. Subsidies saw the biggest increase at 68% y-o-y to SAR 13 bn. Employee compensation accounted for the lion’s share of public spending at SAR 139.8 bn.
The Kingdom’s top expenditures in 1H: Money spent on employee compensation clocked in at SAR 139.8 bn — the largest line item during the period — followed by goods and services usage at SAR 75.6 bn and non-financial assets (Capex) at SAR 64.9 bn. Total expenditure rose 12% y-o-y to SAR 674.8 bn in the first half of this year.
