KSA announces largest annual budget in Kingdom's history
Financial reforms in the past two years may be beginning to bear fruit, with growing oil revenue and non-oil revenue
Saudi Arabia's Council of Ministers approved its 2019 budget, the largest in the Kingdom's history. It has planned to spend $295bn in the coming year, and estimates revenue at $260bn. Deficit is therefore estimated at $35bn, down 32% from the expected deficit for 2018, $52bn. Actual deficit in 2018 sat at $36.2bn.
"This year's budget continues to improve the efficiency of public fiscal management, and promote economic stability and financial sustainability," Crown Prince Mohammed bin Salman said, noting that economic reforms have helped reduce deficit since 2016, and marking financial stability as a fundamental pillar of the country's progress.
Minister of Finance Mohammed Al-Jadaan indicated that spending priorities would focus on social and economic programs including the private sector stimulus plan, Vision 2030 implementation program, and that the government would continue to increase efficiency in its spending. Social spending is expected to take up 42% of the Kingdom's 2019 expenditure. Meanwhile, private sector stimulation programs will receive an investment of around $53.3bn.
A statement from the Saudi Press Agency noted that Crown Prince Salman expects that non-oil revenue will increase to $83.45bn in 2019, up 9% from 2018 non-oil revenue of $76.5bn. In 2014, non-oil revenue stood at half the value, $33.8bn.
While it aims to diversify its economy, oil prices, which increased up until early October (and then crashed to $56 per barrel of Brent crude as of writing), have bolstered growth in the nation. Saudi Aramco tendered several key redevelopment projects, including the $15bn Marjan project, and has placed a bold emphasis on localisation, with its In-Kingdom Total Value Add program.
OPEC and its allies in early December decided to cut output by 1.2mn barrels per day (including 400,000 bpd cut by OPEC allies), in an attempt to balance global supply and demand.
The country's GDP growth rate is expected to reach 2.6% in 2019, up from 2.3% in 2018. A statement from the Saudi Press Agency indicated that economic reforms and improved private sector involvement would support this growth.