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Saudi Budget: Non-Oil Revenues Highest Since End of 2020

A general view of the Saudi capital, Riyadh. (Reuters)
A general view of the Saudi capital, Riyadh. (Reuters)
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Saudi Budget: Non-Oil Revenues Highest Since End of 2020

A general view of the Saudi capital, Riyadh. (Reuters)
A general view of the Saudi capital, Riyadh. (Reuters)

Non-oil revenues in Saudi Arabia grew by 4 percent year-on-year during the second quarter of 2024, to reach SAR 140.6 billion ($73.3 billion), the highest level since the end of 2020.

Capital spending maintained its growth, as it rose by 49 percent year-on-year during the same period, reaching SAR 65 billion ($17.3 billion).

According to a statement by the Ministry of Finance on the budget performance for the second quarter of 2024, the total revenues increased by 12 percent, recording SAR 353 billion, while total expenditures amounted to SAR 369 billion and the value of the deficit SAR 15.3 billion.

The deficit for the first half of 2024 stands at 35% of the projected deficit for the year. The deficit amounted to SAR 15. 3 billion in the second quarter of 2024.

The International Monetary Fund (IMF) expected the Saudi budget to achieve a surplus in 2024, supported by the continued growth of the non-oil private sector. However, the Finance Ministry statement projected an annual deficit of 1.9 percent of GDP, and that the deficit to continue in the 2025 and 2026 budgets.

The volume of capital spending highlights the momentum gained by projects in the Kingdom, as part of Vision 2030, which contributed to shaping Saudi Arabia’s economic plans. Non-oil revenues reflect the government’s success in the process of diversifying the economy.

According to Ministry of Finance, total Saudi budget revenues increased by 12 percent in the second quarter of 2024, recording SAR 353 billion.

Non-oil revenues grew by 4 percent, reaching their highest levels since 2020, while oil revenues recorded a growth of 18 percent to SAR 213 billion ($56.8 billion) during the same period.

Total expenditures in Saudi Arabia during the second quarter of this year increased by 15 percent year-on-year to SAR 368.9 billion ($98.3 billion), compared to SAR 320 billion in the same period of 2023.

Expenditures grew by 12 percent year-on-year during the first half of 2024. The municipal services sector topped the volume of spending with 116 percent.

Spending on education during the first half of this year represented 52 percent of the total approved budget, amounting to SAR 101.8 billion, a decline of 1 percent compared to the same period of 2023.

For the seventh consecutive quarter, the general budget recorded a deficit of SAR 15.34 billion ($4 billion) during the second quarter of 2024. Public debt also increased at the end of the first quarter by 9 percent since the beginning of the year, reaching SAR 1.15 trillion. The Kingdom had borrowed SAR 104 billion from internal parties during the first half of 2024, and SAR 67.8 billion from external lenders.

The data also highlighted that the Kingdom’s GDP contracted by 0.4 percent in the second quarter compared to the same period last year, attributed to an 8.5 percent decline in oil activities.

In remarks to Asharq Al-Awsat, former member of the Shura Council, Dr. Fahd bin Jomaa said the government has put a plan within Vision 2030 to boost non-oil activities and reduce reliance on oil.

He noted that achieving a 4 percent growth in the non-oil sector was an indication that the country is moving in the right direction and building a real and diversified economy.

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Urgent Financial Tasks Await Lebanon’s Emerging Government

Lebanese President Joseph Aoun stands between Speaker of Parliament Nabih Berri and caretaker Prime Minister Najib Mikati (dpa)
Lebanese President Joseph Aoun stands between Speaker of Parliament Nabih Berri and caretaker Prime Minister Najib Mikati (dpa)
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Urgent Financial Tasks Await Lebanon’s Emerging Government

Lebanese President Joseph Aoun stands between Speaker of Parliament Nabih Berri and caretaker Prime Minister Najib Mikati (dpa)
Lebanese President Joseph Aoun stands between Speaker of Parliament Nabih Berri and caretaker Prime Minister Najib Mikati (dpa)

A broad internal consensus, encompassing both political and economic dimensions, is taking shape to adopt the principles outlined in the presidential inauguration address as the foundation of the new government’s program and ministerial statement. This approach aims to sustain Lebanon’s immediate and strong positive momentum, which is reinforced by widespread support on both Arab and international levels.

Economic bodies and professional unions representing business sectors have openly expressed their relief and full support for the strategic directions set by President Joseph Aoun following his election. However, they have made it clear that maintaining this positive momentum depends on the formation of a reform-oriented rescue government, composed of competent, experienced, and honest ministers. This government must also collaborate constructively with the president.

According to a senior financial official, the rescue mission will be challenging due to years of governmental inaction and constitutional voids, which led to a deterioration in public sector operations and the accumulation of economic, financial, and monetary crises over the past five years. These challenges were further compounded by a devastating war, which inflicted severe human and financial losses estimated at approximately $10 billion, thereby worsening the country’s financial gap, now estimated at $72 billion.

Economic and banking circles are looking to the new government to swiftly capitalize on extensive international support by restoring trust and reestablishing financial channels between Lebanon and its regional and international partners. Key to this effort are explicit and transparent commitments to combating illegal economic activities, corruption, smuggling, money laundering, and drug trafficking. In parallel, the government must prioritize strengthening judicial independence and implementing strict controls over land, sea, and air borders.

The national consensus evident in the presidential election, according to Mohammad Choucair, head of Lebanon’s economic associations, paves the way for constructive collaboration among political factions. This collaboration is crucial for addressing challenges, rebuilding the state, and benefiting from renewed international and Arab—particularly Gulf and Saudi—interest in Lebanon. Choucair emphasized the importance of normalizing relations with Gulf nations, supporting Lebanon’s recovery, and providing resources for reconstruction efforts.

One of the urgent tasks for the new government, according to the financial official, is revisiting the draft 2024 state budget, which was previously submitted to parliament. Adjustments are necessary to address fundamental discrepancies in expenditure and revenue projections, taking into account significant changes brought about by the Israeli war.

Ibrahim Kanaan, chairman of the Parliamentary Finance Committee, described the budget as “unrealistic, if not entirely fictitious,” particularly in its revenue estimates. He pointed out that revenue increases were based on income and capital taxes, internal duties, and trade-related fees, all of which have been severely impacted by the war.

Reassuring depositors, both domestic and expatriate, who have suffered massive losses over recent years, is another pressing issue. These losses were exacerbated by the inability of successive governments to implement a comprehensive rescue plan addressing the $72 billion financial gap fairly. The situation was worsened by mismanagement in the electricity sector and the squandering of over $20 billion in central bank reserves following the onset of the financial crisis.

In response to Aoun’s commitment to a fair resolution for depositors, the Association of Banks in Lebanon welcomed his emphasis on safeguarding deposits. It also expressed its readiness to collaborate with the central bank and the government to protect depositors’ rights, citing a recent State Council ruling that prohibits any financial recovery plans from including measures that would erode depositors’ funds.

In its final session, the caretaker government addressed long-standing creditor issues by unanimously agreeing to suspend Lebanon’s right to invoke statutes of limitations on claims by foreign bondholders under New York law. This suspension, effective until March 9, 2028, aims to facilitate future negotiations.

With this decision, the caretaker government tacitly acknowledged Lebanon’s pending debt obligations, including over $10 billion in suspended interest payments on Eurobonds and approximately $30 billion in principal debt. The resolution now awaits direct negotiations under the new administration, which faces the challenge of resolving a nearly five-year-old crisis triggered by the previous government’s uncoordinated decision to halt payments on all Eurobond obligations through 2037.

Caretaker Finance Minister Youssef Khalil emphasized that despite the difficult circumstances, “Lebanon remains committed to reaching a fair and consensual resolution regarding the restructuring of Eurobond debt.”