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May 23, 2024

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Vision 2030 in Action: Unveiling the 2023 status report in light of the strategic role of the 2024 Budget

As part of its ambitious pursuit of Vision 2030, Saudi Arabia has revealed its 2024 budget, allocating 1,251 billion SAR for total spending compared to an expected revenue of 1,172 billion SAR. This strategic move aims to reduce the budget deficit to 79 billion SAR, a decrease from the previous year's 82 billion SAR. Aligned with broader economic reforms, the 2024 budget signals a shift towards fiscal responsibility and economic diversification away from oil revenues. Emphasizing the importance of increasing non-oil revenues, the government demonstrates its dedication to sustainable growth, advancements in specific sectors, and improved public services, all within a positive economic outlook. This marks a significant step in KSA’s journey towards achieving its Vision 2030 objectives, showcasing a balanced approach of ambition and fiscal prudence.

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Compared to our previous version, which used the most recent report available at its time of publication, the newly released 2023 annual report has demonstrated significant improvements in six key metrics:

  • FDI as a percentage of GDP increased 2.2% – 2.4%
  • Unemployment rate decreased 8% – 7.7%
  • Public Investment Fund (PIF) grew 2.23 trillion SAR – 2.81 trillion SAR
  • Average life expectancy rose 77.6 years – 78.10 years
  • Private-sector contribution to GDP increased 43% – 45%
  • Share of non-oil exports in non-oil GDP jumped 12.9% – 24.1%

Comparative Review: 2024 Budget Plan and Forecasts vs. 2023 Budget Plan and Actuals

The Kingdom of Saudi Arabia has outlined its budget plans for 2024, setting the total expenditure at 1,251 billion SAR. . Forecasted revenue for the same period is expected to reach 1,172 billion SAR, indicating a projected budget deficit of 79 billion SAR. In comparison to the 2023 actual budget, which recorded slightly higher expenditure at 1,275 billion SAR and revenues at 1,193 billion SAR, resulting in a deficit of 82 billion SAR. This underscores a strategic initiative by the KSA aimed at achieving a more balanced budget, with a focus on efficiently managing expenditures and bolstering revenue streams.

The projected deficit for 2024 is formulated based on the government’s cautious assessments of both oil and non-oil revenues, considering potential economic fluctuations both locally and globally.
In an optimistic scenario, the government could potentially witness a surplus of SAR 234 billion. However, in a less favorable scenario, a deficit of SAR 102 billion could materialize. To address any potential deficit, the government intends to issue various types of debt, for example, The National Debt Management Center has concluded the March 2024 issuance under the Saudi Arabian Government’s SAR-denominated Sukuk Program, with a total allocation of SAR 4.441 billion. This issuance was distributed across three tranches, with varying sizes and maturity dates: the first tranche at SAR 203 million maturing in 2029, the second at SAR 3.697 billion maturing in 2034, and the third at SAR 540 million maturing in 2039.
It is anticipated that public debt will rise to 25.9% of GDP in 2024, up from 24.8% of GDP in 2023, remaining comfortably below the 50% debt ceiling.

On the side: The fiscal deficit is projected to be 1.9% of GDP in 2024, down from 2% in 2023 and a surplus of 2.5% in 2022.

In 2023, the GDP from non-oil sectors in the Kingdom reached a new high, accounting for 50% of the total real GDP. This significant achievement was primarily driven by the private sector’s increased contribution and a rise in foreign direct investment (FDI). These factors, along with others, spurred a 4.7% growth in non-oil activities. Despite this progress, the Kingdom’s overall real GDP experienced a 0.9% decline from the previous year. This drop was mainly due to a sharp 9.2% decrease in oil activities.

2024 Budget Alignment: Charting the Course Towards Vision 2030

I. Health and Social Development

Ratio of sector contribution to the total budget: 17% – [share of budget allocation decreased by 14.5% (2024 vs 2023).
The comprehensive plans and projects outlined for FY 2024 closely align with the overarching goals of Vision 2030, particularly within the domains of Health and Social Development. Initiatives such as the establishment of advanced response centers and a National Health Emergency Operation Center directly contribute to the objective of enhancing healthcare services. Similarly, the focus on promoting a healthy lifestyle is evident in the expansion of sports facilities and the support for women in sports. These efforts not only aim to improve health outcomes but also foster social inclusivity and empowerment, aligning with the broader aspirations of Vision 2030.
Within the sphere of culture and media, the introduction of the SaudiPedia platform and the Media Excellence Award mirrors the objectives of Vision 2030 to promote culture and entertainment, with the aim of ensuring that Saudi visual content achieves global recognition. These initiatives signify a strategic endeavor to elevate Saudi Arabia’s cultural influence on the international platform, thereby fostering a vibrant society in alignment with the goals envisioned for 2030.
Furthermore, the focus on social development through initiatives like “Aoun” for national volunteering and enhancing cooperative societies underscores a commitment to creating an empowering environment for Saudis. These measures are poised to boost job creation and economic growth, thereby improving livability in Saudi cities and ensuring environmental sustainability through active community involvement.

II. Education

Ratio of sector contribution to the total budget: 15.6% – [ share decreased by 3.3% (2024 vs 2023)
The FY 2024 plans highlight a comprehensive approach to align Saudi Arabia’s educational strategies with the goals of Vision 2030. By enhancing accessibility and integrating technology, these initiatives aim to provide equitable education opportunities that extend beyond traditional classrooms. The emphasis on digitalization, professional development, and aligning educational outputs with labor market demands reflects a forward-thinking strategy intended to enhance both the quality and relevance of education in the country.
However, challenges persist in the capacity to accommodate international students, hindering the attraction of expatriates and potentially creating obstacles for establishing regional headquarters initiatives. Addressing these challenges will be essential to fully realizing the strategic objectives, requiring adaptive measures and strategic partnerships to strengthen the educational infrastructure and expand its capacity. This reflection underscores the importance of addressing logistical and operational challenges to ensure the successful implementation of these ambitious plans.

Allocation of 2024 Budget to Key Economic Sectors

Shifts in funding priorities in the allocation of the 2024 budget to key economic sectors underscore the evolving economic landscape and strategic focus of the fiscal year. The Military sector secures the largest share of the budget allocation, while Health and Social Development, Education, and Economic Resources emerge as primary recipients within the economic sectors, signaling a strategic emphasis on key areas of national development.

The health and social development sectors experienced a reduction of 14.5%, leading to a revised allocation of 17% of the total budget. Education also saw a decrease of 3.3%, adjusting its budget share to 15.6%. In contrast, the economic resources sector had an increase of 4.1%, reaching a total budget share of 6.7%. Municipal services’ contribution to the budget decreased by 6.9%, setting its share at 6.5%. Infrastructure and transportation sectors had a modest 2% increase, raising their combined allocation to 3% of the budget.

2024 Budget Alignment: Charting the Course Towards Vision 2030

I. Health and Social Development

Ratio of sector contribution to the total budget: 17% – [share of budget allocation decreased by 14.5% (2024 vs 2023).
The comprehensive plans and projects outlined for FY 2024 closely align with the overarching goals of Vision 2030, particularly within the domains of Health and Social Development. Initiatives such as the establishment of advanced response centers and a National Health Emergency Operation Center directly contribute to the objective of enhancing healthcare services. Similarly, the focus on promoting a healthy lifestyle is evident in the expansion of sports facilities and the support for women in sports. These efforts not only aim to improve health outcomes but also foster social inclusivity and empowerment, aligning with the broader aspirations of Vision 2030.
Within the sphere of culture and media, the introduction of the SaudiPedia platform and the Media Excellence Award mirrors the objectives of Vision 2030 to promote culture and entertainment, with the aim of ensuring that Saudi visual content achieves global recognition. These initiatives signify a strategic endeavor to elevate Saudi Arabia’s cultural influence on the international platform, thereby fostering a vibrant society in alignment with the goals envisioned for 2030.
Furthermore, the focus on social development through initiatives like “Aoun” for national volunteering and enhancing cooperative societies underscores a commitment to creating an empowering environment for Saudis. These measures are poised to boost job creation and economic growth, thereby improving livability in Saudi cities and ensuring environmental sustainability through active community involvement.

II. Education

Ratio of sector contribution to the total budget: 15.6% – [ share decreased by 3.3% (2024 vs 2023)
The FY 2024 plans highlight a comprehensive approach to align Saudi Arabia’s educational strategies with the goals of Vision 2030. By enhancing accessibility and integrating technology, these initiatives aim to provide equitable education opportunities that extend beyond traditional classrooms. The emphasis on digitalization, professional development, and aligning educational outputs with labor market demands reflects a forward-thinking strategy intended to enhance both the quality and relevance of education in the country.
However, challenges persist in the capacity to accommodate international students, hindering the attraction of expatriates and potentially creating obstacles for establishing regional headquarters initiatives. Addressing these challenges will be essential to fully realizing the strategic objectives, requiring adaptive measures and strategic partnerships to strengthen the educational infrastructure and expand its capacity. This reflection underscores the importance of addressing logistical and operational challenges to ensure the successful implementation of these ambitious plans.

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