Saudi Arabia said Tuesday it would run a budget deficit of 5.3 percent of GDP this year, more than double the previous forecast, with oil revenues falling and higher-than-expected spending.
The deficit is forecast to remain high in 2026 at 3.3 percent of GDP, or 165 billion riyals ($44 billion).
The finance ministry, which had previously forecast a 2025 deficit of just 2.3 percent of GDP, forecast expenditures of 1.3 trillion riyals and revenues of 1.15 trillion.
It predicted GDP growth of 4.4 percent this year, driven by a five percent increase in “non-oil activities”, and of 4.6 percent next year.
The Arab world’s largest economy is engaged in a major drive to diversify its economy and reduce its dependence on oil revenues, with a focus on business and tourism.
That includes megaprojects such as Neom, a futuristic desert metropolis.
Those efforts come at a significant financial cost at a time when the finance ministry expects a decline of 13.4 percent in state revenues.
That is driven in large part by recent falls in oil prices, which had spiked following the Covid-19 pandemic and Russia’s 2022 invasion of Ukraine.
Aramco, the world’s largest oil exporter and a cornerstone of the Saudi economy, has experienced a decline in its profits over ten consecutive quarters since achieving record results at the end of 2022.
Its profits fell 4.6 percent on a yearly basis in the first quarter of the year, and by 22 percent in the second quarter.
The ministry expects Saudi Arabia’s deficit to persist in 2027 and 2028, though shrinking to 2.3 percent and then 2.2 percent of GDP.
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© Agence France-Presse
