Saudi Arabia posts largest quarterly deficit since 2020

Saudi Arabia posted its largest quarterly budget deficit since 2020 as lower oil revenue and spending by the government on NEOM and some of Crown Prince Mohammed bin Salman’s other ambitious projects widened its fiscal gap. 

Signs of the worsening deficit have been evident for months, with the slowing down of NEOM’s $500 billion desert city called The Line and the shelving of the $50 billion Mukaab centerpiece in Riyadh’s New Murabba district.

The fiscal pressure has coincided with a leadership shake-up, with veteran investment minister Khalid Al-Falih replaced by Fahad Al-Saif, a former Public Investment Fund executive.

According to a Finance Ministry report issued on Monday, the kingdom recorded a shortfall of about 31 billion riyals ($8.2 billion) in the fourth quarter, with total revenue slipping while expenditures remained elevated.

The budget report showed oil income from state giant Saudi Aramco fell about 12% year on year to roughly $45 billion.

The government says it retains room to borrow and manage debt levels because of its relatively low debt-to-GDP ratio and continued access to global debt markets.