Saudi Arabia’s 2025 budget, represents a careful balancing act between sustaining economic growth and reining in fiscal challenges in a changing global oil market. The kingdom forecasts total expenditure of 1.285 trillion riyals against revenues of 1.184 trillion riyals, leaving a deficit of 101 billion riyals, about $26.88 billion, representing 2.3% of GDP. Although this is slightly below the deficit of 2.8% in 2024, it is indicative of continued fiscal pressures due to weaker oil prices.

The budget has shown Saudi Arabia’s commitment to Vision 2030, with heavy investment in the non-oil sector for the diversification of the economy. The kingdom is anticipating 4.6% economic growth in 2025, driven by a strong and vital non-oil sector amid an unfavorable perspective for the oil market.

However, the kingdom faces significant headwinds from oil market dynamics. With Brent crude prices currently around $73 per barrel, well below the $98 per barrel needed for fiscal breakeven, the pressure on public finances is considerable. This challenge could push public debt to 29.9% of GDP in 2025.

The non-oil sector’s projected 3.7% growth in 2024 represents a positive shift towards sustainable revenue streams. Key initiatives in tourism and housing development, combined with growth in manufacturing, technology, and financial services, are positioned to create a more resilient economic structure. As these sectors mature, they are expected to play an increasingly important role in narrowing the fiscal deficit and reducing the kingdom’s dependence on oil revenues.