While discussing the 2018 annual budget of his kingdom recently, King Salman stated that the kingdom will spend more in 2018 than any other time in its history.
Government expenditure is estimated around SR978 billion ($260.8 billion) this year, rising from SR890 billion last year. Total public expenditure will rise to more than SR1.1 trillion in 2018 due to additional spending from development funds. According to the Saudi Press Agency (SPA), housing, industrial and mining projects will be funded by The National Development Fund in addition to other packages aimed at stimulating the private sector. This year new and existing projects will be funded by the Public Investment Fund (PIF).
In spite of rising levels of spending, the budget deficit is expected to be a whopping SR195 billion representing less than 10 % of GDP (Gross Domestic Product). This is the second time since the drop in oil prices that the deficit is falling to the single digits. The budget deficit in 2015 was at a staggering 15 % of the GDP while the rate for 2017 was at 8.9 %. The current 2018 budget is anticipating a deficit below 8 % of GDP. The current budget envisages that the Kingdom will balance its books by 2023.
Rising oil prices in the second half of 2017 erased the previously projected negative growth of the Saudi economy. This year the economy is expected to rise to 2.7 % thanks to appreciating global oil prices.
The huge government expenditure this year is expected to help the Kingdom’s efforts in meeting its Vision 2030 reform agenda which seeks to increase the national economy and sustain its growth.
King Salman was recently quoted as saying “Dozens of programs have been launched to realize the goals of diversifying the economic base and empower the private sector to play a major role in sustaining expenditure efficiency, in order to realize appropriate economic growth rates, mitigate the burden on the citizens and tackle possible impacts, in addition to supporting the private sector”
Improving the living standard of the citizenry and diversifying the economy is said to be top on the Kingdom’s agenda. The Kingdom is also striving hard to stimulate the private sector to generate more jobs.