Saudi Arabia posts $15.6bn budget deficit in Q1 with resilient non-oil growth
RIYADH: Saudi Arabia recorded a budget deficit of SR58.7 billion ($15.65 billion) in the first quarter of 2025, according to the Ministry of Finance's latest fiscal performance report, as lower oil revenues outpaced gains in non-oil income.
Total revenues for the quarter reached SR263.61 billion, marking a 10.16 percent decline compared to the same period last year. The drop is primarily attributed to reduced oil revenues, which fell 17.65 percent year on year to SR149.81 billion, driven by ongoing OPEC+ production cuts that curbed export volumes despite relatively steady global oil prices.
Oil income accounted for 56 percent of total government revenues, down from 62 percent in Q1 2024.
In contrast, non-oil revenues continued to grow modestly, rising 2.06 percent to SR113.81 billion, underpinned by structural economic reforms and the Kingdom's diversification agenda under Vision 2030.
Taxation on goods and services remained the largest contributor to non-oil income, generating SR71.56 billion—up 2.37 percent year on year. Other non-oil revenue sources, including fees and investment returns, added SR25.41 billion, making up 22.3 percent of the non-oil total.
Total government expenditures in the quarter rose 5.39 percent year on year to SR322.32 billion. The increase reflects Saudi Arabia's continued investment in strategic initiatives and priority development projects aligned with Vision 2030 goals.
Compensation for government employees remained the largest expenditure category, totaling SR146.09 billion—an annual increase of 6.24 percent—and accounting for 45.3 percent of total spending.
Expenditures on goods and services amounted to SR64.63 billion, or 20 percent of the quarterly total, while capital spending represented 8.6 percent. Other operational costs comprised 10.6 percent.
The first quarter deficit was entirely financed through debt instruments, pushing Saudi Arabia's total public debt to SR1.33 trillion—up 19.08 percent from a year earlier.
Of this, 60 percent was sourced domestically, with the remainder attributed to external borrowing, in line with the Kingdom's debt diversification strategy.
Despite the fiscal shortfall, the ministry noted that the quarterly figures remain consistent with the government's 2025 budget plan. Revenues in the first quarter represent 22.3 percent of the full-year target, while expenditures account for 25 percent of the planned annual spend.
Looking ahead, Saudi Arabia's fiscal outlook may receive a boost from higher oil output. OPEC+ recently announced plans to accelerate the unwinding of prior production cuts, including a June increase of 411,000 barrels per day. Combined with earlier boosts in April and May, the group plans to restore a total of 960,000 barrels per day—reversing 44 percent of the 2.2 million bpd reduction agreed upon in December 2024.
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