Saudi Arabia’s non-oil economy to grow 4.4% in 2025: PwC

RIYADH: Saudi Arabia’s total government revenues reached SR1.26 trillion ($336 billion) in 2024, marking a 4 percent increase from the previous year and exceeding the initial budget estimates by 7 percent, the latest official data showed. 

According to the budget performance report released by the Ministry of Finance on Thursday, total expenditures stood at SR1.37 trillion, reflecting a 6 percent annual increase, while the budget deficit widened to SR115.63 billion — up 43 percent from 2023 but in line with projections. 

The rise in revenues was primarily fueled by a surge in non-oil income, which accounted for 40 percent of total revenues and reached SR502.47 billion, reflecting a 9.78 percent year-on-year increase. 

Taxes on goods and services accounted for the largest portion of non-oil revenues, comprising 57.5 percent of the total and increasing by 10.03 percent from 2023. 

Other major sources included non-tax revenues at SR121.94 billion, other taxes at SR35.65 billion, taxes on income, profits, and capital gains at SR31.57 billion, and taxes on international trade and transactions at SR24.5 billion, representing a 4.88 percent share in 2024.  

Despite oil remaining the dominant revenue source, its share of total government income declined from 62.24 percent in 2023 to 60 percent in 2024, with revenues from crude oil and petroleum products reaching SR756.62 billion.  

The decline in oil revenues in 2024 was largely attributed to Saudi Arabia’s commitment to production cuts in line with OPEC+ agreements aimed at stabilizing global oil markets.   

Despite this, the Kingdom remains on an expansionary fiscal path, with increased government spending supporting Vision 2030 initiatives. 

The rise in expenditures reflects sustained investment in infrastructure, economic diversification, and social development projects. 

While the budget deficit widened, it remains within expectations and at a manageable level relative to GDP. 

Saudi Arabia continues to uphold a strong fiscal position, reinforced by prudent debt management and favorable credit ratings. The Ministry of Finance, in collaboration with the National Debt Management Center, follows a comprehensive borrowing strategy that ensures long-term sustainability by diversifying financing sources across domestic and international markets. 

The government has also expanded its financing channels through sukuk and bond issuances, project-based funding, and partnerships with export credit agencies. 

These measures, combined with substantial financial reserves, position Saudi Arabia to navigate economic fluctuations while sustaining strategic investments. 

Crown Prince Mohammed bin Salman reaffirmed the government’s commitment to fiscal reforms, emphasizing economic diversification and private sector empowerment as key pillars of long-term financial stability. 

Despite global economic uncertainties, the Kingdom remains well-positioned to drive regional and global economic growth.   

Breakdown of expenditures 

Saudi Arabia’s total government spending grew 6 percent year on year, reaching SR1.37 trillion. Employee compensation remained the largest expenditure category, rising by 4 percent to SR558.92 billion. 

Spending on goods and services followed, comprising 24 percent of total expenditures at SR311.25 billion. Non-financial assets capital expenditures, known as CAPEX, accounted for 14 percent of total spending, amounting to SR190.6 billion. 

In the fourth quarter of 2024, government expenditures reached SR360.52 billion, marking a 9 percent decrease compared to the same period in 2023. 

Despite the rise in the budget deficit, the Kingdom’s fiscal performance remained in line with expectations, demonstrating resilience in non-oil revenue growth and continued commitment to economic diversification under Vision 2030. 

In the fourth quarter of 2024, total revenues stood at SR302.86 billion, reflecting a 15 percent drop compared to the same period in 2023 due to lower oil revenues. 

Oil income fell by 31 percent year on year, while revenues from non-oil activities saw a notable 21 percent increase during the same period, according to Ministry data.

Public debt and fiscal management 

Saudi Arabia’s public debt rose to SR1.22 trillion by the end of 2024, a 16 percent increase from the previous year. Domestic debt accounted for 61 percent of the total, while foreign debt made up the remaining 39 percent. 

Public debt has been strategically leveraged to finance large-scale projects and initiatives that are central to Vision 2030, such as infrastructure development, diversification of the economy, and investments in non-oil sectors.

The sustained demand for Saudi debt on the international market also underscores the country’s solid credit ratings and fiscal policies that continue to attract global investors.

This rise in public debt is being managed prudently by the government, which has been focused on ensuring that borrowing supports growth without overstretching fiscal limits.

Furthermore, the Saudi authorities have undertaken reforms to ensure that debt levels do not adversely affect the country’s fiscal health, and that it is being used to generate long-term returns through infrastructure and economic diversification.

RIYADH: Saudi Arabia has rolled out Infra-guaranteed financing and surety bonds to support contractors in the construction industry, according to a senior official.

In an interview with Arab News at the third Private Sector Forum in Riyadh on Thursday, Leyla Abdimomunova, head of the Real Estate and Construction at PIF’s National Development Division, explained that her department is focused on strengthening the capabilities of contractors in the Kingdom through various upskilling initiatives and pre-qualification programs.

This push to fortify the construction sector is critical to Saudi Arabia’s broader economic diversification strategy, where infrastructure development plays a key role.

According to Mordor Intelligence, the Kingdom’s construction market is projected to reach $74.11 billion by 2025, with a compound annual growth rate of 5.37 percent, ultimately reaching $96.26 billion by 2030.

“One of the biggest issues that the contractors are facing is access to finance and resources, to be able to mobilize for their projects, to purchase materials, and to pay their workers throughout the whole project. And typically banks, they are not very eager to finance construction projects in general because they’re high-risk and smaller contractors in particular,” said Abdimomunova. 

She added: “So, we have created a number of products specifically targeting contractors. One of them is Infra-guaranteed financing. National Infrastructure Fund guarantees up to 50 percent of the bank loans provided to contractors. We signed the first-ever Infra-backed financing package. It was signed by the National Infrastructure Fund, Arab National Bank, and one of our contractors called Saudi Pan Kingdom Co.”

Abdimomunova stated that the inaugural infrastructure-backed financing package will be utilized for a project within ROSHN.

She also highlighted that Saudi Arabia is the first country in the Gulf Cooperation Council to introduce surety bonds, which serve as an alternative to traditional bank performance bonds.

“The second great achievement that we had on contractor financing is a completely new product in the GCC region. It is common across the world, but unfortunately, it was not previously available in the Kingdom, and it is called a surety bond. A surety bond is an insurance alternative to a bank performance bond,” said Abdimomunova. 

She added that the first-ever surety bond in the entire GCC region was signed between Walaa Insurance Co. and System Security Solutions Co. and it will serve one of the projects in Red Sea Global. 

Explaining more about surety bonds, she continued: “Surety bond allows to function like an insurance, where it provides a guarantee to the contractor that they can present to their client as a guarantee that if something wrong happens with the project, then insurance company will step in and cover the losses.”

Abdimomunova further explained that the primary role of the Real Estate and Construction Department is to develop products like surety bonds by collaborating with financial institutions, contractors, and development companies.

She also emphasized the growing importance of localizing building materials, as demand for such products is increasing in the Kingdom due to the ongoing large-scale infrastructure projects.

“What we are trying to do and the target that we created for ourselves is that at least 50 percent of the supply gap should be covered through localization. We are working with Saudi development companies to aggregate and estimate the demand for building materials. We have now a demand estimate until 2040,” said Abdimomunova. 

She added that this information will be leveraged to attract investors and help expand capacity by establishing more factories.

Abdimomunova also noted that her department is currently collaborating with 270 companies, half of which are based in the Kingdom, while the rest are international. This collaboration aims to increase the number of building material manufacturing factories in Saudi Arabia.

“Today, we have five factories already commenced last year. We expect about 20 more factories to open throughout the next two years. We have close to 100 companies already expressing their intent to localize,” said Abdimomunova. 

She added that her department is assisting companies in identifying investment opportunities, helping them conduct feasibility studies, facilitating connections with relevant ministries and financial institutions, and supporting them throughout the entire investment process.

Abdimomunova also outlined additional efforts by the Real Estate and Construction Department to support contractors in the Kingdom.

She explained that the department is responsible for developing the sector and the ecosystem surrounding the real estate development projects under PIF.

“So, what my department is doing is basically activating and mobilizing the whole ecosystem, attracting international contractors, working with the local contractors and helping them grow and prove their capabilities, attracting foreign direct investment into manufacturing of building materials, construction equipment, working with the local manufacturing partners to help them expand their capacity and build new factories, as well,” said Abdimomunova. 

She added that the primary goal of her department is to reach out to the private sector outside of the PIF, and bring them in to become the partners of the projects initiated by the wealth fund. 

According to Abdimomunova, the department is trying to strengthen medium-sized contractors through various initiatives and upskilling projects. 

“We have a Contractor Prequalification Program. So it’s a program that we run jointly with the Saudi Contractors Authority. It’s a platform which allows local contractors to register and pre-qualify to work with our development companies. So today we have almost 3000 contractors registered on the platform and more than 300 contractors pre-qualified,” said Abdimomunova. 

She added: “We also have contractor upskilling boot camps. So it’s a training program. These boot camps are organized either by ourselves or by development companies. Through these camps,  trying to give them the minimum skills that they need to be able to be invited to the projects and also to win this project.”