RIYADH: Saudi Arabia on Tuesday approved the state budget for fiscal year 2025 with revenues projected at SR1.18 trillion ($315.73 billion) and expenditure at SR1.28 trillion, leading to a deficit of SR101 billion.

The Finance Ministry forecasted Saudi Arabia’s Real GDP growth at 4.6 percent in 2025, up from the 0.8 percent estimate for 2024. This growth will be driven by a rise in non-oil sector activities, according to the statement.

The figures align with projections from the ministry’s pre-budget statement in September, showing a 4 percent decline in revenues, a 4 percent decline in expenditures, and a 12 percent lower deficit compared to the latest FY 2024 estimates.

The FY2025 forecast are based on a baseline scenario, which represents a middle ground between higher and lower revenue projections, taking into account potential changes in economic activity and global petroleum market conditions.

The ministry projects the deficit to remain at similar levels in the medium term, with SR130 billion in 2026 and SR140 billion in 2027, driven by the government’s strategic expansionary spending policies aimed at fostering economic diversification and sustainable growth. Revenues are expected to rise over the next two years, reaching around SR1.3 trillion by 2027.

The Kingdom’s total debt is projected to reach SR1.3 trillion in 2025, equivalent to 29.9 percent of GDP, reflecting a sustainable level to meet financing needs.

Revised projections for Saudi Arabia’s 2024 budget indicate a deficit of SR115 billion, with total debt expected to reach SR1.2 trillion, or 29.3 percent of GDP.

The fiscal year 2025 budget prioritizes maintaining essential services for citizens and residents, while accelerating spending on key projects and sectors.

It focuses on preserving fiscal stability and achieving long-term sustainability by managing government reserves and maintaining sustainable public debt levels, ensuring the Kingdom’s resilience against unforeseen economic shocks.

In a statement following the weekly Cabinet session, Crown Prince Mohammed bin Salman emphasized the government’s ongoing efforts to strengthen the Kingdom’s economic base. “We will continue to work on expanding the economic base and enhancing the Kingdom’s financial position,” he stated.

He also highlighted the pivotal role of Saudi Arabia’s sovereign wealth funds—the Public Investment Fund and the National Development Fund—in driving economic stability and achieving Vision 2030 objectives. “These funds are essential to diversifying the economy and supporting long-term investments,” he said.

Saudi Arabia’s economy is advancing through strategic reforms and robust investment initiatives under Vision 2030, emphasizing diversification and fiscal sustainability.

Key objectives include increasing the private sector’s contribution to GDP, growing the share of foreign investment, and boosting non-oil exports.

The strategy also prioritizes reducing unemployment and accelerating investment growth by enhancing the business environment, providing innovative financing solutions, and attracting regional headquarters of multinational companies to establish a strong presence in the Kingdom.

Key enablers, including the PIF, are driving private sector growth, launching transformative projects, and fostering new industries.

These efforts, outlined in the 2025 budget statement, aim to boost social and economic outcomes while ensuring resilience against global challenges and long-term prosperity.

Breakdown of projected government revenues and expenditures

The ministry projects tax income at SR379 billion in 2025, making up around 32 percent of total revenues. This represents a 4 percent increase compared to the 2024 estimates. The majority of these levies, accounting for 77 percent, come from taxes on goods and services.

According to the ministry, this growth is driven by sustained improvements in economic activity, the ongoing development of tax administration, and enhanced collection processes, all of which have contributed to a boost in total tax revenues.

In terms of sector-specific expenditures, the military sector received the largest allocation at SR272 billion, marking a 5 percent increase compared to the 2024 estimates.

The health and social development sector followed with a 20.25 percent share amounting to SR260 billion.

General items with 14.95 percent share of 2025 budgeted expenditures will be allocated SR192 billion.

Financing the deficit

The Ministry of Finance, in collaboration with the National Debt Management Center develops an annual borrowing plan aligned with the Kingdom’s medium-term debt strategy, ensuring long-term debt sustainability.

This strategy not only diversifies financing sources, encompassing both domestic and external markets, but also enhances the Kingdom’s standing in global debt markets.

Additionally, the government is expanding its financing channels by tapping into bond and sukuk issuance, loans, and alternative funding models like project and infrastructure financing, as well as collaborating with export credit agencies.

According to the Ministry of Finance, the Kingdom maintains a robust fiscal position, underpinned by substantial financial reserves and manageable public debt levels.

This fiscal strength provides the government with the ability to manage potential economic shocks and meet its financing needs across short, medium, and long-term horizons, while securing favorable borrowing terms from both domestic and international markets.

The crown prince also reaffirmed the government’s commitment to fiscal reforms that have already improved Saudi Arabia’s credit ratings. While the projected deficit for 2025 signals short-term fiscal challenges, the government is focused on ensuring long-term economic sustainability.

He noted that this year’s budget will continue to prioritize economic diversification, with significant emphasis on empowering the private sector and fostering growth in small and medium-sized enterprises.

The crown prince stressed that, despite global economic uncertainties, Saudi Arabia is well-positioned to navigate external challenges and play an increasingly central role in regional and global economic stability.

“Our economy is well-prepared to overcome challenges,” he said.

He also emphasized the importance of long-term financial planning to maintain momentum on Vision 2030 initiatives, underscoring the government's focus on spending efficiency and transparent execution of the budget to meet its strategic goals.

Moody’s upgraded Saudi Arabia’s credit rating to “Aa3” from “A1” on Friday, highlighting the country’s progress in diversifying its economy beyond oil.

The Kingdom is investing heavily in Vision 2030 initiatives, focusing on sectors like tourism, sports, and manufacturing, while also attracting foreign investment.

Despite lower oil prices and reduced production, Saudi Arabia continues to adjust its spending, delaying or scaling back some Vision 2030 projects while prioritizing others.

Moody’s revised the country’s outlook to stable, reflecting uncertainties in global economic conditions and the oil market. In September, S&P also upgraded Saudi Arabia’s outlook to positive due to strong non-oil growth.

JEDDAH: Saudi Arabia has been awarded the presidency of the Aviation Security Committee for a third consecutive term following a unanimous vote by member states.

The announcement was made during the recent 40th committee meeting held at the Arab Civil Aviation Organization’s headquarters in the Moroccan capital, Rabat. 

The result underscores the Kingdom’s pivotal role and constructive efforts in dealing with regional and global developments in the aviation industry, according to the Saudi Press Agency.

It also underlines the Kingdom’s international standing in forums related to civil aviation and its engagement in specialized international organizations in the field.

Commenting on the reappointment, the General Authority of Civil Aviation’s executive vice president Mohammed Al-Fozan – who also serves as chairman of the Cooperative Aviation Security Program in the Middle East – underlined the significance of enhancing collaborative Arab efforts in aviation transportation security.

He also spoke of the importance of maintaining continuous communication to uphold the highest safety standards.

The vice president explained that Saudi Arabia, a member of ACAO since its creation in 1996, has been working to support the international organization’s efforts through active participation, coordination, and involvement in its corporate structures, the executive council, and its technical committees.

He assured that the Kingdom will continue its efforts to develop and support the Arab League-affiliated organization, enhance its international leadership role, and collaborate with stakeholders to strengthen the industry.

The Kingdom’s civil aviation sector saw a 17 percent annual increase in the first half of 2024 as it reached 62 million passengers, driven by rising domestic and international travel demand.

According to GACA, the period also saw 446,000 flights, a 12 percent rise compared to 2023.

Additionally, air cargo traffic at the country’s airports surged by 41 percent, reaching 606,000 tonnes during the same period.

These developments support Saudi Arabia’s aviation goals, which include tripling annual passenger numbers to 330 million, expanding connectivity to over 250 destinations from its 29 airports, and increasing air freight capacity to 4.5 million tons annually by 2030.

According to GACA, Saudi Arabia remains committed to supporting global civil aviation through various programs and initiatives. 

This includes deploying experts to work with specialized bodies, hosting the permanent headquarters of the International Civil Aviation Organization’s CASP-MID, and housing the permanent hub of the Regional Safety Oversight Organization for the Middle East and North Africa.

SPA also highlighted the Kingdom’s $1 million contribution to ICAO under the “No Country Left Behind” initiative.