Budget Deficit In Saudi Arabia Aligned With Economic Goals, Says Minister Of Finance

Riyadh: Mohammed Al-Jadaan, Minister of Finance in Saudi Arabia, has emphasized that the budget deficit in the country is not negative but rather serves important economic goals. Responding to concerns about the deficit's impact on the economy, Al-Jadaan stated that it is intentional and maintained at sustainable levels to support economic development objectives. This differs from the forced negative deficits observed in some countries, where borrowing is necessary to cover non-productive expenses.

Management of the budget deficit is one of the Kingdom's top priorities, with the government implementing strategies and policies aimed at promoting sustainable economic growth and effective debt management. The state will continue to strategically allocate funds towards achieving comprehensive development goals, including increased investment in programs and major projects aligned with Saudi Vision 2030. These initiatives are expected to yield high returns and foster sustainable economic growth.

Highlighting the importance of productive expenses, Al-Jadaan expressed that a limited deficit that is not disruptive is acceptable as long as it contributes to productive activities. The government does not mind financing the deficit through debt, as long as borrowed funds are directed towards economic activities that generate returns surpassing the cost of the debt.

To maintain fiscal stability, the Kingdom holds government reserves and sustainable levels of public debt, ensuring it is equipped to withstand financial and economic shocks. Government spending is carefully utilized to diversify the economic base, with a total expenditure of approximately 1,293 billion riyals recorded by the end of 2023, marking an 11% increase from the previous year. This progress aligns with ongoing structural reforms and initiatives, as well as the implementation of regional and sectoral strategies geared towards achieving comprehensive sectoral development and economic diversification.

Attracting both local and foreign investments is crucial to stimulating economic growth and reducing the budget deficit. The government aims to create a favorable business environment through sound economic policies, fostering opportunities for job creation, entrepreneurship, and innovation. Capital expenditures for 2023 are projected to reach around 186 billion riyals, with continued spending on Saudi Vision 2030 programs, sustainable major projects, infrastructure development, and improved public services across various regions.

Internationally, Saudi Arabia has implemented policies and reforms to develop its financial sector and attract foreign investment. These efforts have resulted in a significant influx of foreign investments in key sectors such as energy, infrastructure, and technology, with foreign direct investment contributing 2.4% of the GDP. The country's enhanced economic growth and competitiveness have enabled it to advance by seven places in the Competitiveness Yearbook 2023, securing a position among the top 20 countries.

Saudi Arabia actively participates in regional economic integration initiatives, forging strong economic ties with neighboring countries and benefiting from regional markets to drive mutual prosperity. It also upholds valuable partnerships with international organizations, aiming for collective goals and cooperation across various fields.

Al-Jadaan regarded the opening of a regional office by the International Monetary Fund in Riyadh as a strategic step to strengthen international cooperation and enhance regional economic stability. The inaugural event also included the establishment of the Industrial Policy and Economic Diversification Forum, attracting prominent decision-makers, speakers, and academics.