The Saudi Ministry of Finance announced the 2019 Budget on 1 8th December 2018. This report is a continuation of Strategic Gears’s commitment to highlight key insights and outlooks from Saudi budget announcements. In this report, we will compare the 2018 estimates and the 2019 budgeted fiscal and economic figures with the actual and forecasted ones from the recent past and future respectively.
With the 2019 budget announcement, the government also released estimates for the performance of the 2018 budget, which have been revised upwards for both revenue and expenditure increases, with the deficit decreasing due to a higher rise in the former. Although the Kingdom’s revenue diversification strategies have increased non-oil revenues significantly, the upward revision of the revenues was led by the rise in oil prices during 2018.
With the historically-largest budget of 2019, the Kingdom plans to finance persistent efforts in the form of Vision Realization Programs (VRPs) and other VISION 2030 initiatives, while sustaining and facilitating economic growth.
Fiscal Outlook: The 2019 budget prioritizes expenditure on capital investments and VRPs, which is also reinforced by efforts to maximise current expenditure efficiency. On the other hand, as recent increases in oil prices have increased revenues, the Kingdom remains committed to diversify, culminating in increasing nonoil revenues consistently over the past period and continuing into the medium term. As a result, the Kingdom is on track to achieve Fiscal Balance, despite slight revisions, by 2023.
Economic Outlook: While the oil price decline of 2014 caused select economic indicators to decline accordingly, the government’s initiatives to strengthen the economy are also coming to fruition. The various programs and initiatives are working together in protecting and strengthening the economy, increasing GDP growth, providing employment, empowering women, supporting SMEs, and enabling private sector growth.
Overall, the outlook for the Kingdom’s economy and financial health remains positive, but the full effects of the programs and initiatives will be seen in the medium to long term.