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Saudi Budget 2024: Anticipated Spending of SAR 1.251 Bn, Revenues of SAR 1.172 Bn

Expectations for the Saudi economy are an extension of its positive performance (SPA)
Expectations for the Saudi economy are an extension of its positive performance (SPA)
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Saudi Budget 2024: Anticipated Spending of SAR 1.251 Bn, Revenues of SAR 1.172 Bn

Expectations for the Saudi economy are an extension of its positive performance (SPA)
Expectations for the Saudi economy are an extension of its positive performance (SPA)

Saudi Arabia’s Finance Ministry has announced a preliminary statement of budget for the fiscal year 2024 with expenditures valued at SAR 1,251 billion and revenues projected to be SAR 1,172 billion.

A limited deficit is estimated to be recorded at about 1.9 percent.

Finance Minister Mohammed al-Jadaan reaffirmed the Saudi government’s commitment to ongoing structural reforms on both the financial and economic fronts.

These reforms aim to foster economic growth, diversify the economy, and sustain economic growth rates while maintaining financial sustainability.

According to al-Jadaan, this will be achieved through the continued implementation of programs and projects outlined in the Kingdom’s national transformation plan, “Vision 2030”.

The launch of various initiatives and strategies will also help in the development of promising economic sectors, attracting investments, stimulating industries, and increasing both local content and non-oil exports in Saudi Arabia.
The minister further emphasized the significant and active role played by the Public Investment Fund and development funds in ensuring the ongoing implementation of structural reforms.

These reforms aim to boost the growth of non-oil sector activities at high and sustainable rates over the medium term, said al-Jadaan.

He also projected a growth in real Gross Domestic Product (GDP) by 4.4% for the upcoming fiscal year.

In addition to achieving the Kingdom’s goals of financial sustainability and directing expansionary spending to expedite the implementation of major projects and strategies, the budget also focuses on attracting investment, stimulating economic activity, and developing Saudi Arabia’s public financial performance.

The minister added that “the process of analyzing the financial and economic risks facing the Kingdom’s economy is a vital part of understanding the current situation, as it contributes to adopting effective policies and strategies to deal with these risks.”

He said that despite any crises the world is witnessing and their negative impact on the global economy – as was the case with the coronavirus pandemic and geopolitical tensions that negatively affected global supply chains – Saudi Arabia is in a “solid financial position.”

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British Assets Gain, Mid-cap Stocks Lead after Labour Election Win

A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
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British Assets Gain, Mid-cap Stocks Lead after Labour Election Win

A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights

British domestic-focussed mid-cap stocks were the biggest gainers on Friday after the centre-left Labour Party surged to a comprehensive win in a parliamentary election with blue chip stocks, government bond prices and the pound higher.

Hopes that the incoming government will provide a period of economic stability after an often tumultuous 14 years of Conservative Party rule sent the FTSE 250 midcap index (.FTMC), up as much as 1.8% in early trading to its highest since April 2022.

The blue chip FTSE 100 index (.FTSE), was last up 0.2% and the yield on 10-year British government bonds or gilts, dropped 3 basis points to 4.17%, marginally better than other European markets, Reuters reported.

Labour won a massive majority in the 650-seat parliament while Rishi Sunak's Conservatives suffered the worst defeat in the party's long history as voters punished them for a cost of living crisis, failing public services, and a series of scandals.

"A landslide victory provides the sort of clarity and stability that equity markets need in an increasingly volatile world," said Ben Ritchie, head of developed market equities at abrdn.

"If the new government gets this right, businesses with significant exposure to the UK economy should be the likely winners - a shot in the arm in particular for companies in the FTSE 250 and FTSE Small Cap".

British home builders stood out, with an index tracking their shares up 2.3%.

"We think the formation of a Labour-majority government will have a positive impact on housebuilders and construction materials," said Aruna Karunathilake, portfolio manager at Fidelity.

"We expect Labour to reinstate housebuilding targets and perhaps also fund investment in local planning departments... That should alleviate builders’ concerns about planning bottlenecks impeding growth in the medium term."

Analysts at Goldman Sachs said that while Labour's manifesto policies imply relatively limited changes to fiscal policy they would modestly boost demand in the near term.

As a result, they raised their forecasts for British GDP growth by 0.1 percentage points in each of 2025 and 2026.