Saudi Arabia approved its 2024 budget on Wednesday, which forecasts a fiscal deficit of 79 billion riyals ($21.06 billion) or 1.9% of GDP next year, as it pushes ahead with plans to bolster its non-oil sectors as part of plans to diversify its economy.
Following are comments from economists and analysts:
MAZEN ALSUDAIRI, HEAD OF RESEARCH AT AL RAJHI CAPITAL
"The debt to GDP ratio is still under control. The deficit to GDP is 2%, total debt to GDP is about 26%, it’s very low. The level of deficit is under control. You have to push the diversification of the economy. There are so many targets, for example the Expo (in 2030), there are other sport events that are going to happen, giga projects need infrastructure, it’s investment."
NAIF ALGHAITH, CHIEF ECONOMIST AT RIYAD BANK
"There is an increase in spending; now it is about 29% of GDP so this really gives a push to the economy. The Ministry of Finance spending is not the only thing that drives the economy, the giga projects complement the spending.
If you divide the budget into revenues and spending, the revenue side will be impacted by the oil cut. So in 2024, it's (estimated at) 1.172 trillion riyals, it's quite conservative and I think Saudi Arabia could in the baseline get higher revenues."
JUSTIN ALEXANDER, DIRECTOR OF KHALIJ ECONOMICS AND GULF ANALYST AT GLOBALSOURCE PARTNERS
"The core story is the same one from September- significantly higher spending levels than were contemplated a few years ago are here to stay, and the government is comfortable in budgeting deficits rather than targeting movement towards a fiscal balance because it is confident of securing financing."
MONICA MALIK, CHIEF ECONOMIST AT ABU DHABI COMMERCIAL BANK
"There were no major surprises in the 2024 budget, which was in line with the pre-budget statement despite the recent decline in the oil price. The revenue estimate in the budget still looks conservative in the context of the extension of the production cut in 1Q. As such, we forecast a smaller deficit based on a higher revenue outlook. We see strong underlying economic momentum driven by the investment plans in 2024."
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