Strategy Note /
Saudi Arabia

2023F Pre-Budget: Towards high growth

  • The statement included key economic and fiscal developments over the medium term

  • The budget main objective is to continue enhancing and strengthening the fiscal position of Saudi

  • The government aims to continue its borrowing activities from the domestic and external markets

Iyad Khalid Ghulam
Iyad Khalid Ghulam

Head of Equity Research

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SNB Capital
3 October 2022
Published bySNB Capital

The Ministry of Finance (MoF) issued its preliminary statement for the budget of 2023f. In 2022e, Saudi is projected to report a surplus of SAR90bn (2.3% of GDP), in-line with the initial target. The government's fiscal policy objective remains broadly unchanged and 2023f budget mainly aims to strengthen the fiscal position to enhance Saudi’s capacity to face economic challenges and external shocks while achieving high economic growth. The 2023f pre-budget outlined that Saudi will achieve a fiscal surplus of SAR9bn (0.2% of GDP) which will be directed to enhance government reserves and support national funds. Real GDP is projected to grow by 8.0% in 2022e, followed by a growth of 3.1% and 6.0% in 2023f and 2024f, respectively.

  • MoF announced the preliminary statement for the general budget of 2023f-2025f. The statement included key economic and fiscal developments over the medium term, focusing on economic and fiscal reforms while maintaining fiscal sustainability and spending efficiency. The government remains committed to invest in Vision Realization Programs (VRPs), national strategies and mega projects to achieve Vision 2030 goals. We note that estimates may be updated in the final budget statement which will be issued in December 2022.

  • The budget main objective is to continue enhancing and strengthening the fiscal position of Saudi, while the ongoing structural reforms are expected to drive economic growth. The government is projecting a budget surplus of SAR9bn (0.2% of GDP) in 2023f, with the expectation that budget surpluses will continue to be achieved over the medium term. This would be accomplished by 1) diversifying revenues by increasing revenues that are related to economic activities and 2) enhancing quality and efficiency of spending.

  • In 2022e, Saudi is estimated to achieve a budget surplus of SAR90bn (2.3% of GDP) vs a deficit of SAR73bn (2.3% of GDP) in 2021. This is in-line with the initial budget target. However, we believe these number may be updated in the final budget statement, as a surplus of SAR135bn has already been achieved in H1 22.

  • Despite the expectation of budget surpluses over the medium, the government aims to continue its borrowing activities from the domestic and external markets with the aim of repaying debt principal that comes due in 2023f.

  • Real GDP is estimated to grow by 8.0% in 2022e (vs 3.2% in 2021), supported by growth in both oil and non-oil GDP. Non-oil GDP is expected to grow by 5.9% in 2022e. Moreover, real GDP is expected to grow by 3.1% in 2023f, followed by 6.0% and 4.5% in 2024f and 2025f, respectively.