Saudi Budget 2024: Comprehensive Analysis and Its Impact on the Economy and

The Saudi Budget 2024 represents the annual financial plan adopted by the Saudi government to allocate financial resources across various sectors. Its importance lies in being the main tool for implementing economic and social policies, as it determines the size of government spending, revenue sources, and the expected deficit or surplus. The budget is also a key reference for local and international investors, as it reflects the Kingdom's financial and economic directions and influences investor confidence. In light of Vision 2030, the state budget has become more dynamic, with an increased focus on developing non-oil sectors, achieving fiscal sustainability, and enhancing quality of life. The budget's significance is particularly evident in its ability to stimulate the economy, support vital sectors, and create new job opportunities, as well as in its role in maintaining financial performance and ensuring the continuity of long-term development programs.

The total planned expenditure for the Saudi Budget 2024 amounts to approximately SAR 1,209 billion, distributed across seven main sectors. The defense and military security sector leads with allocations reaching SAR 269 billion, followed by education (SAR 195 billion), and health and social development (SAR 214 billion). Additionally, SAR 112 billion is allocated to security services and regional administration, SAR 81 billion to municipal and urban services, SAR 84 billion to economic resources, and SAR 38 billion to infrastructure and transport. General items, including salaries, social services, and administrative expenses, are allocated SAR 216 billion. This level of spending reflects the state's commitment to balancing security and development needs while enhancing fiscal sustainability. These figures underscore the Saudi government's active role in steering the national economy and supporting vital sectors in line with Vision 2030 priorities.

Data from the Saudi Budget 2024 show that spending is strategically distributed across different sectors. The defense and military security sector, which includes defense and security spending, holds the largest share due to the importance of regional stability and the Kingdom's pivotal role in the region. Next is the education sector, reflecting the state's commitment to developing human capital, followed by the health and social development sector, which is a top spending priority to provide high-quality healthcare services and achieve social development. Significant allocations have also been made to municipal and urban services to improve quality of life in Saudi cities, while spending on economic resources focuses on supporting agriculture and small industries, reinforcing economic diversification efforts. Although the infrastructure and transport sector received relatively lower allocations, this reflects the government's approach to relying on private sector partnerships for large-scale projects. The size of spending on general items also highlights the state's commitments to salaries, social, and administrative services.

Allocations for the defense and military security sector in the Saudi Budget 2024 reached about SAR 269 billion, making it the largest sector in terms of government spending. This substantial figure reflects the strategic importance the Kingdom places on national security, especially amid regional and international challenges. This sector covers spending on the armed forces, air defense, internal security, and the development of defense and technological capabilities. The government also focuses on modernizing military equipment, developing human resources, and improving readiness to address security threats. This level of spending strengthens the Kingdom's position as a key player in regional stability and supports local defense industries as part of localization plans. High spending in this sector also positively impacts related industries such as manufacturing, technology, and logistics, creating jobs and supporting GDP growth.

The education sector is allocated around SAR 195 billion in the Saudi Budget 2024, highlighting the government's priority to develop human capital within the framework of Vision 2030. These allocations cover spending on schools, universities, scientific research, and vocational training and development programs. The aim is to improve education quality, enhance national competencies, and align educational outcomes with labor market needs. The budget also focuses on developing educational infrastructure, supporting innovation, and expanding partnerships with the private sector and global educational institutions. This approach enhances the Kingdom's ability to build a competitive knowledge-based economy, achieve sustainable development, and support the shift towards non-oil sectors. Such investments indirectly impact the economy by raising workforce productivity and improving human capital indicators.

The Saudi Budget 2024 allocates approximately SAR 214 billion to the health and social development sector, ranking it second after defense and education in terms of spending. This sector includes funding for hospitals and health centers, primary healthcare programs, and the expansion of health insurance services. Allocations also support social development programs such as family support, employment initiatives, and improved social safety nets. The aim is to enhance the quality of healthcare, improve service efficiency, and reduce health disparities between regions. The government also focuses on digital transformation in the health sector, infrastructure development, and strengthening partnerships with the private sector in service delivery. These investments are fundamental to achieving quality of life goals under Vision 2030, contributing to higher life expectancy and improved citizen well-being.

The Saudi Budget 2024 seeks to support the non-oil economy by allocating SAR 84 billion to the economic resources sector. This includes support for agriculture, small and medium enterprises, tourism, and technology. The government also pursues revenue diversification policies by stimulating investment in non-oil sectors and increasing their contribution to GDP. Key policies include developing special economic zones, supporting entrepreneurship, and promoting non-oil exports. Taxes such as the value-added tax (15%) and government fees play an increasing role in diversifying income sources. These efforts enhance the economy's resilience to oil price fluctuations and support long-term fiscal sustainability. The Public Investment Fund is highlighted as a main tool for transforming oil surpluses into investment projects that drive future growth.

The infrastructure and transport sector in the Saudi Budget 2024 received allocations of SAR 38 billion, a relatively lower amount compared to other sectors. This figure reflects the government's direction to strengthen partnerships with the private sector in implementing transport, road, airport, and port projects. Despite lower allocations, mega projects such as NEOM, The Line, and renewable energy zones require significant funding, much of which comes from private and local or foreign investments. The government focuses on developing modern transport systems, smart infrastructure, and sustainable mobility solutions, supporting urban development goals and enhancing the Kingdom's attractiveness to international investors. These projects also create new jobs, stimulate local supply chains, and support industries related to infrastructure.

The Saudi Budget 2024 relies mainly on oil revenues, which often account for more than 60% of total government income. Global oil prices determine the state's ability to finance planned spending. In addition, non-oil revenues come from sources such as value-added tax, government fees, and returns on state investments in major companies like Aramco. The government aims to increase the share of non-oil revenues by developing alternative economic sectors and expanding the tax base. Any potential budget deficit is financed through issuing sukuk and government bonds, and resorting to local or foreign borrowing if necessary. These policies aim to achieve sustainable fiscal balance and reduce dependence on volatile global oil markets.

The Saudi Ministry of Finance has not announced an exact figure for the expected deficit or surplus in the 2024 budget, but estimates indicate a target of relative balance between revenues and expenditures. If oil prices remain at moderate levels ($70-80 per barrel), the Kingdom may achieve a limited fiscal surplus; if prices fall, a slight deficit may appear, to be covered by government debt instruments. Historically, Saudi Arabia recorded a surplus in 2022 following a rise in oil prices, while a slight deficit was expected in 2023 as prices declined. Current fiscal policies aim to control spending, increase the efficiency of government support, and improve public debt management to ensure long-term fiscal sustainability.

The Saudi Budget 2024 indirectly affects the performance of the Saudi stock market (Tadawul), as increased government spending raises demand for services in related sectors such as contracting, banking, and real estate. Spending on infrastructure, education, and health projects also supports profit growth for relevant companies, positively impacting their share prices. Conversely, a budget deficit may lead to increased issuance of government bonds, raising interest rates and affecting market liquidity. The budget is also an indicator of investor confidence in the Saudi economy, especially when accompanied by stable fiscal policies and expectations of sustainable growth. Thus, the budget remains an important tool for tracking investment trends and assessing risks and opportunities in the financial market.

The Saudi Budget 2024 surpasses most Gulf countries' budgets in size and impact, with the Saudi economy exceeding SAR 10 trillion ($2.7 trillion). Regional competition is evident in attracting investments and implementing mega development projects, as the Saudi Public Investment Fund, alongside its Gulf partners, finances projects in energy, petrochemicals, tourism, and technology. Large government spending enhances the Kingdom's ability to attract foreign capital and achieve leadership in future-oriented sectors. This also reflects on the performance of listed companies on Tadawul and gives a strong boost to local and global investments in the Saudi economy.

The Saudi Budget 2024 faces several challenges, most notably global oil price volatility, slowing demand for traditional resources, and rising social demands. Increasing public debt and borrowing costs also pose risks if fiscal deficits persist. Global variables such as inflation and interest rates affect public finances and the cost of financing government projects. Additional challenges include achieving the objectives of mega projects on schedule, as any delays may negatively impact expected returns and future budgets. The Saudi government continues to work on financial hedging policies, improving spending efficiency, and enhancing non-oil revenues to address these challenges and ensure sustainable economic growth.

The Saudi Budget 2024 embodies the state's commitment to achieving Vision 2030 goals by increasing spending on non-oil sectors, developing human capabilities, and stimulating innovation and technology. This is evident in the allocations for education, health, infrastructure, and increased support for future projects in tourism and renewable energy. Fiscal policies also focus on strengthening partnerships with the private sector, developing special economic zones, and supporting entrepreneurship. These efforts aim to build a diversified, sustainable economy capable of meeting global challenges. The budget reflects the government's dedication to investing in Saudi citizens, improving quality of life, and achieving balanced economic and social development.