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Even though the post-COVID-19 global economy is still facing several difficulties due to geopolitical conflicts as well as high interest and inflation rates, the Saudi financial position is still showing strong indicators, reflected in the 2024 pre-budget statement released by Ministry of Finance.

The Kingdom’s financial position is supported by maintaining a healthy level of government reserves, exceeding $400 billion, and a modest level of public debt to gross domestic product, which reached 24.8 percent in 2022, giving ºÚÁÏÉçÇø the lowest debt to GDP ratio among the G20 countries.

Such strong financial indicators reinforce the Kingdom’s ability to overcome external shocks.

Despite the expected fiscal deficit of $21.1 billion in 2024, the government will continue implementing its fiscal and economic structural reforms to help develop and diversify the national economy and maintain fiscal sustainability, which will be achieved through the continued implementation of Saudi Vision 2030 initiatives and strategies.

The Kingdom will also continue to support private businesses, attract foreign investments, catalyze industries, enhance local content and increase non-oil exports, while continuing to implement structural reforms that will enhance the growth of non-oil GDP at sustainable rates in the medium term.

Additionally, the government will continue implementing fiscal and economic structural reforms in line with Saudi Vision 2030. This includes, but is not limited to, developing fiscal policies to meet the objectives of the Fiscal Sustainability Program, in addition to adopting fiscal policies that contribute to achieving budget sustainability and stability.

It is expected that the Kingdom’s real GDP growth will reach 4.4 percent in 2024, supported by the growth of non-oil GDP and the private sector. This will support the government’s efforts to create job opportunities for nationals and improve trade balance.

Also, it is expected that the strong financial position of the Kingdom will lead to revenue growth in the medium term, reaching $335.7 billion in 2026.

Finally, it is expected that real GDP growth will reach 0.03 percent in 2023, supported by non-oil GDP growth of 5.9 percent, in line with promoting promising economic sectors, such as tourism, which has improved its contribution, taking the Kingdom’s GDP from 3 percent to 7 percent in just a few years.

It is worth noting that the average price of Brent crude oil decreased from the beginning of the year through August 2023 by 22.2 percent, compared to an average price of $80.8 per barrel in the same period in 2022.

Also, the Kingdom has reduced its oil supply by 5.22 percent in 2023 to reach 9.96 million barrels per day to support OPEC+ efforts to stabilize oil prices.

I believe that despite the forecasted fiscal deficit in 2023 through 2026, the financial position of the Kingdom is still solid and strong enough to overcome any unforeseen external financial and economic shocks, especially when considering the growth of real GDP during 2023 and beyond is expected to reach 5.1 percent in 2026, with a nominal GDP amounting to $1.27 trillion and an inflation rate of 1.9 percent.

• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz