This week, Saudi Arabia unveiled its 2020 budget, which signals an end to the expansionary trend of recent years, assumes lower oil prices than in 2019, and continues to invest in the economic diversification as outlined in the Kingdom’s Vision 2030 economic and social reform plans.
Riyadh-based Jadwa Investment released a report on the 2020 budget, noting that budgeted government expenditure will total SR1020 billion ($272b) in 2020. Based on revenues of SR833 billion ($222 billion), the government is budgeting for a higher year-on-year deficit at SR187 billion ($50 billion) in 2020 (6.4 percent of GDP), compared to SR131 billion ($35 billion) in 2019 (4.7 percent of GDP).
“A larger fiscal deficit is not expected to translate into higher levels of debt,” Jadwa writes. “According to the budget statement, total debt requirement for next year will be SR76 billion ($20 billion), which is expected to push up total debt to SR754 billion ($201 billion) by end of 2020, equivalent to 26 percent of GDP, as per the budget statement.”
Looking at the budget from a sectorial level, ‘education’ is expected to make up the largest portion of budgeted expenditure, at 19 percent of the total. Meanwhile, a sizable reduction in ‘military’ expenditure is budgeted for the second consecutive year, and is expected to decline by 8 percent year-on-year in 2020, Jadwa said.