Saudi Arabia’s Finance Minister, Mohammed Al-Jadaan, revealed the Kingdom has experienced a deficit of around $3.3 billion in this year’s first quarter.
Al-Jadaan suggested the deficit was intentionally created to align with the kingdom’s sustainable development goals.
Saudi Kingdom’s Finance Ministry Release Report
A report released by the Saudi Finance Ministry on Sunday, May 5, revealed the kingdom experienced a budget deficit of SR12.4 billion ($3.3 billion) in Q1.
The loss marks the sixth consecutive budget deficit for the Saudi Kingdom.
Intentional Deficit for Economic Development
When speaking with Al-Eqtisadiyah in an interview, Al-Jadaan explained the deficit was intentional.
“We’re intentionally running a sustainable deficit for economic development, contrasting with mandatory borrowing in some nations for essential but unproductive expenses,” he said.
Saudi Government Prioritizes Spending to Accelerate Projects
During the interview, the minister explained that the Saudi government “prioritizes spending to accelerate the implementation of its development strategies and projects.”
Al-Jadaan suggested the Kingdom was experiencing sustainable growth as a result of its fiscal policies, which led to consequential deficits.
Finance Minister Reassures Citizens
Speaking on the budget deficit and its potential impact on the economy, Al-Jadaan assured Saudi citizens that carefully handling the nation’s budget is a top priority.
He revealed that the government isn’t worried as long as the deficit is the result of productive expenses, as this generates profitable returns that exceed the cost of the national debt.
Saudi Government Aims to Reduce Dependency on Oil Revenue
During the interview, the minister highlighted the Kingdom’s sustainable financial policies, which he suggests work to sever the region’s dependency on oil revenue.
According to Al-Jadaan, non-oil revenues comprised nearly 40% of the Kingdom’s revenue in 2023, a considerable increase from the 9% of 2015.
Financial Policies Can Enhance Funding and Innovation, Says Minister
“Financial policies can enhance financial inclusion and access to funding, both vital for supporting entrepreneurship, small and medium-sized enterprises and innovation,” said Al-Jadaan.
He continued, “This contributes to achieving the goals of Saudi Vision 2030, which has succeeded in unprecedented achievements across various sectors.”
The Efficiency of Government Spending
Al-Jadaan spoke on the efficacy of government spending and its role in creating economic resilience.
The official added, “We are committed to optimizing government expenditures by directing them toward promising strategies aimed at diversifying the economic base.”
Saudi Kingdom Continues to Implement Initiatives
The minister claimed that at the end of 2023, Saudi governmental spending had risen to nearly SR1.29 trillion, reflecting their commitment to structural reforms and the implementation of new initiatives.
“These initiatives include regional and sectoral strategies supportive of structural transformation for comprehensive sectoral development and economic diversification,” Al-Jadaan said.
Saudi Kingdom Aims to Attract New Foreign Investments
According to Al-Jadaan, the kingdom’s consecutive deficits haven’t hurt its international reputation. It plans to continue accepting domestic and foreign investors, further increasing economic growth and reducing the budget deficit.
On strategic spending and how it affects the national economy, he said it “involves directing and allocating financial resources toward specific goals and priorities that align with long-term economic objectives.”
Investment Leads to Opportunity
When speaking on how investment can lead to opportunity outside of the oil industry, Al-Jadaan explained the nation has been able to expand its ports and invest in roads, both of which have created business opportunities for citizens.
He added, “This supports economic activity and raises the non-oil gross domestic product, thereby increasing non-oil revenues and covering additional debt costs.”
Vision 2030
Toward the end of the interview, Al-Jadaan claims that the budget deficit may continue to rise as the nation works to complete parts of its Vision 2030 project, which aims to make the Kingdom a leading destination.
Al-Jadaan explained: “The foreign direct investment as a percentage of GDP reached 2.4%, which stimulated economic growth and bolstered the Kingdom’s competitiveness in the global market, leading it to advance seven positions to become one of the top 20 countries in the Global Competitiveness Report for the year 2023.”
