Saudi Arabia Plans to Cut Spending While Diversifying Economy

Saudi Arabia outlined plans to trim spending in 2025 after overshooting targets this year in an effort to progress a trillion-dollar economic transformation plan.

Expenditure will fall to 1.285 trillion riyals ($342 billion) next year, the Finance Ministry said on Tuesday. The government is forecasting a deficit in 2025 of 101 billion riyals, in line with forecasts it made last month.

Spending in 2024 came in at 7.5% higher than the approved budget for the year, while revenues were 4.9% ahead of the estimates from a year earlier.

Saudi Arabia has taken on massive investment and spending commitments to fund Crown Prince Mohammed bin Salman’s Vision 2030 agenda to diversify the economy away from oil. The country has started to scale back some projects, in part because oil prices remain far below what’s needed to balance the budget.

“The Saudi economy has reached a stage where oil market volatility doesn’t impact it as much as it used to before,” Mohammed Al-Jadaan, Saudi Arabia’s minister of finance, said during a press conference. The difference now, he said, is that spending forecasts are helped by revenues from oil.

Economic growth this year is expected to be 0.8%, rising to 4.6% in 2025, according to the budget.

Saudi Arabia cut its growth forecasts for the next few years and projected deeper budget deficits than previously estimated in preliminary forecasts for revenue and spending published last month. Still, growth of about 4% over the next few years would still outpace most other major economies.