Saudi Budget: Revenue, Expenditure Details and Economic Impact

The Saudi budget is the annual financial plan formulated by the state to determine its sources of revenue and areas of expenditure across various sectors. The document is issued by the Ministry of Finance after extensive coordination with government entities, then presented to the Council of Ministers and the Shura Council for review and approval. The budget is a tool for directing economic policy and setting development priorities, as the distribution of spending indicates which sectors the state considers a priority, such as security, education, health, and infrastructure. The budget directly impacts financial stability, growth rates, investment spending, and the level of services provided to society. Its directions are reflected in financial markets, where investors closely monitor government spending and sectoral allocations. Legally, the fiscal year in Saudi Arabia starts on January 1 and ends on December 31, with government agencies required to spend within approved limits to ensure fiscal discipline, subject to ongoing oversight and financial auditing.

In recent years, the Saudi budget has seen significant growth in spending and revenue distribution, in line with Vision 2030’s economic transformation objectives. For the 2024 budget, total expenditures reached around SAR 1.2 trillion, distributed across key sectors including defense, education, and health. Military spending amounted to SAR 269 billion, education SAR 195 billion, health and social development SAR 214 billion, security and administrative regions SAR 112 billion, and municipal services SAR 81 billion. Economic resources were allocated SAR 84 billion, basic equipment and transport SAR 38 billion, and general items such as salaries and social support SAR 216 billion. On the revenue side, oil revenues remain dominant, with clear growth in non-oil revenues such as taxes and government fees. For the 2025 budget, preliminary data indicates expenditures of about SAR 1,285 billion against expected revenues of SAR 1,184 billion, reflecting a limited deficit and confirming the government’s ongoing commitment to fiscal balance while supporting economic growth.

Historically, the Saudi budget has relied primarily on oil revenues, which constitute the majority of state resources. Global oil prices determine annual revenue levels, making the budget susceptible to international energy market fluctuations. However, recent years have seen a marked expansion in non-oil revenues, thanks to the implementation of a 15% Value Added Tax (VAT), collection of government service fees, privatization programs, and returns from the Public Investment Fund. These measures aim to create sustainable income sources and reduce oil dependency, in line with Vision 2030 objectives. Ministry of Finance data shows a growing contribution of non-oil revenues to the budget, providing greater fiscal stability against oil price volatility. Examples include taxes on goods and services, customs duties, government investment returns, and income from privatization programs.

The Saudi budget allocates expenditures across several main sectors, reflecting government priorities in development, security, and sustainability. The military and security sector leads, accounting for around SAR 269 billion in 2024, followed by education at SAR 195 billion, and health and social development at SAR 214 billion. Municipal and infrastructure sectors play a pivotal role, with SAR 81 billion allocated, while SAR 84 billion supports economic resources such as agriculture and energy. Basic equipment and transport received SAR 38 billion, and general items like salaries and social support accounted for SAR 216 billion. Nearly half of total spending goes to three sectors—defense, health, and education—highlighting the Kingdom’s focus on security, social welfare, and human capital development. Balancing current and capital expenditure remains a challenge to ensure sustainable growth and stimulate the private sector.

Military and security spending represents the largest item in the Saudi budget, reaching about SAR 269 billion for the military sector and SAR 112 billion for security and administrative regions in 2024. This reflects the importance of security and defense in Saudi policy, given the Kingdom’s regional role and defense responsibilities. Allocations cover modernization of military equipment, troop training, development of defense systems, and maintenance of security infrastructure, in addition to supporting civil security agencies. This level of spending aligns with other Gulf countries but remains the highest in the region, enhancing Saudi Arabia’s ability to protect its regional interests and ensure internal stability. Military spending also supports emerging local industries, such as military manufacturing and equipment maintenance, contributing to economic growth and localization of defense industries.

The education sector receives significant attention in the Saudi budget, with SAR 195 billion allocated in 2024. This spending targets the development of general and higher education, support for technical and vocational training programs, and expansion of educational facilities across the Kingdom. Funding also covers overseas scholarship programs and grants, as well as Vision 2030 initiatives such as digital curriculum development and future skills enhancement. These allocations aim to build a qualified human capital base to support the national economy and implement national transformation programs. Investment in education boosts employment opportunities, enhances research capabilities, and drives innovation, making it a cornerstone of any long-term development strategy.

The health and social development sector is one of the main beneficiaries of the Saudi budget, with SAR 214 billion allocated in 2024. This includes spending on hospitals, primary healthcare centers, preventive programs, and the development of health infrastructure, as well as funding for social support programs, health insurance, and care for the most vulnerable families. The focus aims to improve quality of life and raise healthcare standards for citizens and residents, in response to global health challenges and rising demand for medical care. Allocations also support digital transformation initiatives in health, expansion of health insurance programs, and improved human resource management in the sector, positively impacting human development and social stability.

The Saudi budget allocated SAR 81 billion to municipal services in 2024 and SAR 38 billion to basic equipment and transport. These funds aim to develop infrastructure, improve road networks, drinking water, sanitation, electricity, telecommunications, and public transport. Projects also support smart cities, new economic zones, and expansion of public facilities, contributing to improved quality of life and increased investment appeal. These efforts align with Vision 2030 goals to transform Saudi cities into advanced urban centers meeting the highest development standards. Infrastructure improvements also enhance national economic competitiveness and support the development of sectors such as tourism, transport, and trade.

General items account for a significant share of the Saudi budget, reaching SAR 216 billion in 2024. These allocations include salaries for government employees, direct financial support for families (such as energy and food subsidies), and emergency funds and financial reserves. This spending reflects the state’s commitment to ensuring citizens’ living stability and providing a social safety net in the face of economic challenges. It also highlights the importance of current expenditure in the budget, while raising challenges regarding the need to balance current and capital spending to reduce long-term financial burdens. Support policies and salary restructuring play a role in directing resources to the most needy groups and improving efficiency in government resource allocation.

Saudi Arabia launched Vision 2030 to diversify the national economy, reduce oil dependency, and stimulate growth in non-oil sectors. This direction is reflected in the Saudi budget through increased spending on national transformation projects, new economic cities, innovation and entrepreneurship programs, and the development of tourism, entertainment, and technology sectors. Fiscal reforms have included reducing direct subsidies, implementing new taxes, and expanding privatization programs. The Saudi budget seeks to finance Vision 2030 programs by balancing current and investment spending and encouraging partnerships with the private sector to attract local and foreign investment. Indicators confirm that the interaction between the budget and strategic vision enhances fiscal sustainability and comprehensive development.

The Saudi budget plays a vital role in shaping the direction of the local stock market, as the performance of many listed sectors is linked to the scale of government spending. For example, the construction and infrastructure sectors benefit from increased government project spending, while allocations for health and education boost the performance of companies operating in these fields. Budget expectations also influence investor appetite, especially regarding deficit or surplus levels and government bond interest rates. On the other hand, subsidy reforms and new taxes may affect corporate profitability and operating costs. Investors study the details of the Saudi budget annually to assess opportunities and challenges in the financial market, though this does not constitute direct investment advice.

Saudi Arabia follows a cautious fiscal policy regarding government deficits and debt. When a budget deficit occurs, the state draws from financial reserves or issues sukuk and government bonds, both locally and internationally. In recent years, the debt-to-GDP ratio has remained relatively stable, ranging between 30% and 35% according to Ministry of Finance reports. The Kingdom has maintained a high credit rating from agencies such as Fitch, enhancing its ability to borrow at low cost. Fiscal policies aim to keep the deficit within acceptable limits, gradually moving towards fiscal balance to ensure economic stability and strengthen the confidence of local and international investors.

Saudi Arabia has implemented several tax reforms in recent years, including raising the VAT rate to 15%, introducing service fees, and expanding the base of indirect taxes. The state is also studying additional taxes on high incomes and gradually reducing subsidies. These reforms aim to diversify revenue sources and reduce oil dependency, achieving greater fiscal sustainability. This is accompanied by improved tax collection mechanisms and enhanced transparency, as well as support programs for groups affected by higher fees or taxes. The results of these reforms are reflected in the marked growth of non-oil revenues in recent budgets.

The Saudi government has prioritized enhancing transparency in budget preparation and execution by publishing financial data and periodic reports through the Ministry of Finance portal and open digital platforms. This transparency enables researchers and investors to analyze expenditure and revenue details and monitor the implementation of government projects. The ministry has also introduced advanced digital tools for data analysis and activated electronic monitoring and accountability systems, improving the efficiency of public financial management and reducing opportunities for waste or corruption. These steps are part of the public sector’s digital transformation strategy, supporting Vision 2030 goals for transparency and good governance.