The Kingdom of Saudi Arabia is experiencing a significant phase in its economic journey as it navigates through the first quarter of 2024.Recently,the Ministry of Finance and the General Authority for Statistics released an insightful report detailing budget execution and forecasting the GDP for the nation.These statistics reveal both progress and challenges that the Saudi economy is facing amidst a backdrop of evolving global dynamics.

In the first quarter,Saudi Arabia reported a fiscal revenue of approximately 293.43 billion Riyals,juxtaposed against expenditures of about 305.82 billion Riyals.These figures indicate a growth of 4% in revenue and an 8% increase in spending compared to the same period last year.However,this surge in spending has led to a deficit of 12.39 billion Riyals.Notably,the GDP has witnessed a year-on-year decline of 1.8%,although this is an improvement from the previously reported 4.3% decline in the last quarter of the previous year.This suggests a slight easing of the economic pressures that have been mounting on the Kingdom.

The government of Saudi Arabia is determined to adopt an aggressive fiscal policy over the coming years,a strategy that is reflected in the execution of the first quarter budget,which aligns with the overarching policy directions set forth.The budget report released in December 2023 projected an expansive expenditure strategy aimed at supporting sustainable economic growth.For the fiscal year,expected revenues and expenditures are set at 1.172 trillion Riyals and 1.251 trillion Riyals,respectively,which indicates a planned deficit of 79 billion Riyals.This trend of maintaining similar planned deficits is expected to carry over into the fiscal years 2025 and 2026.Notably,expenditures for the first quarter constituted 24% of the annual plan,with various sectors,excluding military and economic resources,frequently exceeding a quarter of their annual spending targets.

However,alongside these fiscal expansions,Saudi Arabia also faces the challenge of rising public debt,which has noticeably increased throughout the first quarter.Projections from the 2024 budget report suggested that the debt balance might reach 1.024 trillion Riyals by the close of 2023,which is equivalent to 24.8% of the GDP.By 2024,this figure is anticipated to rise to approximately 1.103 trillion Riyals,constituting 25.9% of GDP.The budget execution outcomes for this quarter show an initial public debt balance of roughly 1.050 trillion Riyals,with domestic and foreign debts increasing significantly to 20.63 billion Riyals and 44.92 billion Riyals respectively.The final balance by the end of the quarter thus reached about 1.116 trillion Riyals,surpassing the annual planned debt levels.

Examining the economic dynamics from an industry perspective,it is clear that the oil sector continues to play a pivotal role in shaping Saudi Arabia's economic landscape.The report indicates that the decline in GDP of 1.8% can largely be attributed to a 10.6% drop in the GDP contributions from oil activities.Oil revenues,estimated at 181.92 billion Riyals,still managed a slight year-on-year growth of 2%.Further illustrating this turbulent environment,the Q1 performance report from Saudi Aramco revealed a net profit of 102.27 billion Riyals,which marked a 14.5% year-on-year downturn.Despite some favorable factors like reduced production royalties and increasing crude prices,a decline in crude sales volumes along with decreasing profits from refining and chemicals has burdened the company’s total revenues.In spite of these challenges,Aramco distributed a basic dividend of 76.1 billion Riyals for Q4 2023 and issued a performance-related dividend of 40.4 billion Riyals,with expectations of a similar distribution in Q2,thereby providing some relief to the government’s fiscal constraints.

On a more positive note,the non-oil sector is steadily developing,contributing increasingly towards the national economy.In the first quarter,the non-oil GDP grew by 2.8% year-on-year,with non-oil revenues reaching 111.51 billion Riyals,representing a commendable increase of 9%.Cultivating a robust non-oil economy has emerged as a cornerstone of Saudi Arabia's Vision 2030,launched in 2016.A recent report,released in late April detailing the implementation of this vision,marked the halfway point of the initiative.It examined the substantial progress made thus far,noting that in 2016,the total non-oil GDP was around 1.519 trillion Riyals,with targets set at 1.934 trillion Riyals for 2023 and 4.970 trillion Riyals by 2030.As of 2023,the non-oil GDP has nearly reached its target goal at 1.889 trillion Riyals,indicating a strong trajectory towards achieving these ambitious objectives.

Faced with the current economic climate,Saudi Arabia recognizes the urgency of enhancing energy efficiency and facilitating energy transitions as essential strategies to effectively address both domestic and global economic challenges.This acknowledgement was notably echoed during the Global Cooperation,Economic Growth and Energy Development Conference hosted in Saudi Arabia,where key global leaders and experts discussed pressing themes such as inclusive growth,catalyzing energy development,and revitalizing global collaboration.

Within the framework of energy discussions,the theme has centered around fairness in energy access and the urgency of transitioning towards sustainable energy sources.During a dialogue session titled "Population,Policy,and Finance: Achieving a Fair Energy Transition," Abdulaziz bin Salman,the Saudi Minister of Energy,emphasized that diversification of the global energy market is crucial for realizing a just and equitable energy transition.He asserted that ensuring access to secure and reliable energy is vital for emerging economies to achieve meaningful economic development.

Additionally,the Boao Forum for Asia recently convened in Riyadh,with a focus on “Energy Transformation under Sustainable Development Goals.” Here,the critical issues of renewable energy,climate change,and sustainable development were discussed,reinforcing Saudi Arabia's commitment to addressing the world’s energy needs.During the opening dialogue,Minister Abdulaziz reiterated Saudi Arabia’s strategic position within the energy sector,expressing a keen focus on emissions reduction while enhancing sustainable practices.Highlighting the long-standing fruitful collaboration between Saudi Arabia and China in the energy domain,he applauded China’s resolute efforts in energy conservation and emissions reduction while expressing Saudi willingness to further strengthen bilateral partnerships to foster significant contributions toward global development.