His Excellency Mohammed Al-Jadaan, Minister of Finance for Saudi Arabia, said: “I would like to congratulate the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud and His Royal Highness Crown Prince Mohammed bin Salman Al Saud on the announcement of the new budget. This budget affirms the Government’s commitment to promote economic growth and fiscal sustainability. It includes a comprehensive set of new development initiatives, which represent an important milestone in the achievement of Vision 2030 goals. The budget figures reflect the Kingdom’s clear path to achieving effective fiscal discipline through the challenges that we face. ”
Fiscal and economic performance has improved significantly in 2018. The budget deficit is expected to fall to about SAR 136 billion, equivalent to 4.6% of GDP, which is significantly lower than the initially projected deficit of SAR 195 billion (6.9% of GDP). This also represents a significant decrease from the 2017 budget deficit of SAR 238 billion(9.3% of GDP).
Total expenditure in 2018 is expected to reach SAR 1.030 trillion (35.1% of GDP). Total revenues in 2018 are expected to reach SAR 895 billion, up by 29.4% year-on-year. Increased revenues have been driven by a 39.3% increase in oil revenues and a 12.4% increase in non-oil revenues. The increase in non-oil revenues (the contribution of non-oil revenues to total revenues surged up from 12% in 2014 to 32% in 2018, an average growth of 20% during this period) is largely attributed to the continued implementation of economic reforms and initiatives such as value added tax (VAT) and energy price reform.
In light of the above, total public debt is expected to reach SAR 560 billion (19.1% of GDP) in 2018.
The projected indicators for FY 2019 are as follows: total expenditure is expected to reach SAR 1,106 billion, up by 7.3% year-on-year, driven by a 20% increase in capital expenditure that will reach SAR 246 billion in order to finance initiatives under Vision 2030, infrastructure development and improvements to the quality of government services provided to citizens. This will positively affect economic activity, enhance investor confidence and increase employment opportunities for citizens.
In the medium term, fiscal policy will aim to focus on social and economic spending priorities including operating expenses such as the Citizen Account Program, the Private Sector Stimulus Plan and Vision 2030 Programs whilst at the same maintaining the objective of raising government spending efficiency. Operational expenditure is expected to amount to SAR 860 billion or 77.8% of the total expenses in 2019.
Total revenues in 2019 are expected to reach SAR 975 billion, an increase of 9% over the previous year. Oil revenues are expected to reach SAR 662 billion in 2019 compared to SAR 607 billion in 2018, an increase of 9.0%.
The Ministry of Finance will continue to implement its policy of diversifying sources of finance. Public debt is estimated to reach SAR 678 billion by the end of 2019 (21.7% of GDP). Government deposits and reserves with the Saudi Arabian Monetary Agency (SAMA) are expected to reach SAR 496 billion, or 15.9% of GDP.
Real GDP is projected to grow by 2.6% in 2019 compared to 2.3% in 2018, supported by reforms aimed at enhancing the business environment and boosting investment opportunities through increased private sector participation and accelerated growth. The government is working on several economic reforms aimed at stimulating investment in the economy and enhancing investor confidence. It will introduce privatization programs and capital expenditure projects that achieve economic growth and deliver vital projects through private sector stimulus packages and the development of new sectors. The Public Investment Fund will play a pivotal role in supporting economic development, managing and developing the Kingdom's medium- and long-term assets and raising productivity levels. This also includes other initiatives such as Neom and the Red Sea Project aimed at achieving Vision 2030 objectives.
His Excellency Mohammed Al-Jadaan, Minister of Finance added: “the 2019 Budget illustrates the strength and resilience of the Saudi economy, and the continued efforts to improve government performance levels, enhance spending efficiency, adopt the highest standards of transparency and implement comprehensive reforms. Saudi citizens are always the top priority in all government efforts to build a stronger economy and to promote economic and social development in the medium term."
He concluded: “The budget statement issued today represents a continuation of the government's approach to greater fiscal disclosure and transparency and has been preceded by the implementation of other initiatives such as the publication of quarterly budget performance reports, in addition to the Pre-Budget Statement issued in September this year.”