The Budget in the Saudi Financial Market: A Comprehensive Guide and Recent

The budget, or public budget, refers to the annual financial plan prepared by the state or company, aimed at determining expected revenues and planned expenditures over a specified period, often a fiscal year. In the Saudi economy, the budget has strategic importance that goes beyond mere numbers; it reflects the economic leadership's directions and the government's plans to achieve sustainable development. The budget is a key tool for allocating resources among various sectors such as health, education, infrastructure, and defense. It also serves as a mirror for the government's expectations regarding oil prices, which constitute the primary source of revenues, and the expected level of deficit or surplus. Through the budget, local and international entities measure the government's ability to meet its commitments, achieve Vision 2030 targets, and diversify national income sources away from oil dependence. Therefore, analyzing the Saudi budget provides a comprehensive picture of the economy's dynamics and gives investors and stakeholders a deeper understanding of major economic trends.

Although the concept of the budget is used in both the public and private sectors, there are fundamental differences between the state budget and corporate budgets. The state budget is a comprehensive financial plan that outlines government revenue sources (such as oil, zakat, taxes) and public expenditures (such as education, health, defense, infrastructure), and is usually prepared annually and subject to legislative approval. On the other hand, corporate budgets, known as balance sheets or financial statements, are comprehensive statements of a company's assets, liabilities, and shareholders' equity at the end of each financial period. The purpose of corporate budgets is to assess the financial and operational status, determine the company's ability to meet its obligations, and distribute profits. While the state budget aims to manage public spending and control deficits or surpluses, corporate budgets focus on maximizing shareholder value and achieving sustainable profitability. In the Saudi financial market, budget transparency and financial disclosure are fundamental criteria for evaluating listed companies such as Hail Cement (3001).

The Saudi Ministry of Finance announced details of the general budget for the year 2024, targeting government spending to reach approximately 1.34 trillion Saudi Riyals, with revenues expected to be close to this figure, aiming for financial balance. These figures reflect the government's policy of maintaining stable spending while considering moderate oil prices, compared to surpluses in previous years that benefited from rising prices. In the 2025 budget, international estimates indicate the continuation of the balance policy, with a limited deficit of less than 1% of GDP and a noticeable increase in non-oil revenues due to efforts to diversify the national economy. The importance of transparency is highlighted in these budgets, as the Ministry of Finance publishes quarterly reports detailing budget implementation, including capital expenditure, expenses, and realized revenues. Vision 2030 projects and sectors such as tourism, technology, and renewable energy are key focal points in budget distribution, directly impacting the economic sectors and companies operating in the Saudi financial market.

The general budget plays a pivotal role in guiding the performance of the Saudi financial market (Tadawul), as spending and revenue plans affect the movement of stocks and bonds. When an increase in spending on infrastructure or housing projects is announced, demand for products from related sectors such as cement, contracting, and logistics rises. Additionally, budget stability and commitment to financial balance enhance investor confidence, both local and foreign, and support the attraction of foreign investments. Conversely, a rising deficit or revenue fluctuations may increase pressures on the market, raise borrowing costs, and increase volatility. Government financing policies (such as issuing sukuk and bonds) also affect market liquidity and interest rates. Therefore, analyzing the general budget is an important tool for monitoring developments in the Saudi financial market and understanding the factors influencing stock prices, keeping in mind that investment decisions require comprehensive study and consultation with licensed specialists.

The cement sector represents one of the main pillars of the Saudi economy, due to its close ties to infrastructure, housing, and urban development projects. The sector has witnessed notable growth coinciding with increased government spending on major projects under Vision 2030. The budget directly affects cement companies, as rising capital expenditure in the budget leads to increased demand for cement and construction materials. Sector companies, such as Hail Cement (3001), compete with major firms like Eastern Cement (3002) and Yamama (3010) to meet local market needs and export to neighboring markets. Challenges arise from rising energy costs and environmental pressures, prompting companies to adopt clean production solutions and advanced technologies to reduce costs. Sustainability and international partnerships have also become essential pillars to enhance the sector's competitiveness and ensure its sustainable growth amid economic and environmental changes.

Hail Cement Company is one of the prominent companies listed in the Saudi financial market (Tadawul) within the cement sector, carrying the symbol 3001. The company has distinguished itself in recent years with stable financial performance and profit growth, supported by increased demand for cement in housing and infrastructure projects. The company's share price at the end of 2024 and the beginning of 2025 was around 50-60 Riyals per share, while the market capitalization, based on the number of issued shares (approximately 90 million shares), reached several billion Riyals. The price-to-earnings (P/E) ratio ranged between 5 to 8 times, reflecting a moderate level of sector stability. The company maintained a cash dividend distribution policy of 4% to 6% based on the share price, reflecting its balanced profit distribution policy. Quarterly financial reports show revenue stability and improved equity, confirming the company's ability to capitalize on investment opportunities amid government spending trends and budget support for major projects.

The Saudi cement sector is witnessing strong competition among several local companies, notably Hail Cement (3001), Eastern Cement (3002), Yamama Cement (3010), and Tabuk Cement (3031). These companies compete for market share amid rising demand driven by housing and urban development projects. Some companies, such as Eastern Cement, have announced expansions in production lines to increase production capacity by 10% during 2024, benefiting from national budget trends. Competition also includes efforts to reduce costs by adopting renewable energy sources and developing eco-friendly cement products. The importance of exporting to Gulf and African markets is also highlighted, as Saudi companies seek to enhance their regional presence. The flexibility of companies in facing fluctuations in energy and raw material prices, along with their ability to innovate, are critical factors in determining their capacity to capitalize on future growth opportunities.

Oil prices are the primary factor affecting the Saudi budget, as oil revenues represent the largest portion of the state's general revenues. When oil prices rise, government revenues increase, allowing for greater spending on development projects and supporting industrial sectors such as cement. Conversely, if prices decline, the government may have to cut spending or resort to financial instruments such as issuing bonds and sukuk to cover the deficit. This situation indirectly affects listed companies in the financial market, such as Hail Cement (3001), as their sales are influenced by the level of government spending on infrastructure projects. Additionally, fluctuations in oil prices drive the government to enhance non-oil revenues and diversify the economy, which reflects on budget distribution and supports new sectors such as tourism and renewable energy. Therefore, monitoring oil prices and analyzing their implications on the budget is a priority for understanding the dynamics of the Saudi market.

Capital expenditure is one of the essential items in the Saudi budget, encompassing financial allocations for major projects such as roads, airports, new cities, and public facilities. This expenditure is characterized by its support for long-term economic growth, as it creates new job opportunities and stimulates industrial and service sectors. As the share of capital expenditure in the budget increases, the opportunities for contracting and construction companies (including cement companies) to win major project contracts rise. During 2024, reports from the Ministry of Finance revealed a significant increase in capital expenditures, reflecting the government's commitment to achieving Vision 2030 targets. Directing spending towards productive sectors is a crucial factor in supporting the sustainability of the economy and enhancing the financial market's ability to attract investments. Additionally, strict oversight of project implementation ensures efficient spending and achieving the desired economic impact.

The Saudi government places great importance on transparency in preparing and implementing the budget, as the Ministry of Finance publishes periodic reports detailing revenues, expenditures, government agency performance, and the level of deficit or surplus. Listed companies in the financial market, such as Hail Cement (3001), are also committed to publishing their quarterly and annual financial reports on the Tadawul website, allowing investors and analysts to monitor company performance regularly. This transparency is one of the fundamental factors that enhances investor confidence in the Saudi market and attracts foreign investments. Regulatory bodies, such as the Capital Market Authority, ensure that companies comply with financial disclosure standards and impose penalties on violators. These measures allow investors to base their decisions on accurate and reliable data, with the necessity of consulting a licensed financial advisor before making any investment decision.

Sustainability has become a fundamental pillar in preparing the Saudi budget, as the government seeks to achieve a balance between economic growth and preserving natural resources. The state adopts policies to increase spending efficiency, reduce reliance on oil, and enhance non-oil revenues by developing sectors such as tourism, technology, and renewable energy. These trends affect budget distribution, with clean energy and smart infrastructure projects receiving an increasing share of spending. The government also encourages companies to adopt sustainable production practices and offer eco-friendly products, enhancing the competitiveness of Saudi companies in local and international markets. These policies are part of Vision 2030, which aims to build a diverse and sustainable economy that ensures prosperity for future generations.

The years 2024 and 2025 witnessed significant economic developments that affected the Saudi budget. On one hand, the government adjusted spending in response to fluctuations in oil prices while maintaining a high level of capital expenditures to support major projects. On the other hand, the Saudi Arabian Monetary Authority (SAMA) raised interest rates as part of a precautionary monetary policy, impacting the cost of real estate financing and increasing pressures on some sectors such as construction. Reports from the Ministry of Finance also showed an increase in developmental expenditures, particularly in housing and infrastructure projects, positively impacting cement companies. Initiatives to support exports and open new markets for Saudi products emerged as part of the government's efforts to diversify income sources and reduce reliance on oil. These developments underscore the importance of monitoring the budget and understanding its implications for economic performance and future investment opportunities.

The Saudi budget plays a pivotal role in attracting foreign investments and enhancing the appeal of the financial market. Budget stability and clear financial directions provide a positive outlook for the national economy's future, encouraging foreign investors to inject their capital into the Saudi market. Additionally, the government's commitment to transparency and financial disclosure, along with the development of the legislative environment, enhances investor confidence and ensures the protection of their rights. Listed companies, such as Hail Cement (3001), benefit from the influx of foreign investments through increased liquidity and an expanded shareholder base. The government is working on developing financial infrastructure and providing incentives for investors as part of Vision 2030, which aims to raise the contribution of foreign investments to GDP. Monitoring the budget and analyzing its trends remain essential tools for understanding market dynamics and exploring future opportunities.