Finance Ministry issues mid-year economic, fiscal performance report

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The Ministry of Finance (MoF) published today the mid-year economic and fiscal performance report for fiscal year 2024 as part of the government’s policy to enhance the budget preparation process and integrate it within a comprehensive economic and fiscal framework.

The report outlines the key developments in the Kingdom’s economic and fiscal performance during H1 2024. It presents data and analysis on the fiscal performance as well as the economic indicators for H1 2024, along with an update and an assessment of fiscal projections through the end of 2024.

Additionally, this report also presents an analysis of the key macroeconomic indicators for 2024, considering current domestic and global developments.

The developments in fiscal and economic indicators can be summarized as follows:

The Gross Domestic Product (GDP) of non-oil activities recorded a positive growth rate of 4.1% in H1 2024 compared to the same period last year, driven by increases in both private consumption and investment.

In H1 2024, real GDP declined by 1%, mainly due to a 12.9% reduction in Saudi Arabia’s crude oil production, with an average production of approximately 9 million bpd compared to an average production of 10.3 million bpd in the same period last year.

This decline resulted from the continued voluntary production cuts agreed upon in OPEC+ to support crude oil market stability. Consequently, the real GDP of oil activities dropped by about 10.0% in H1 2024.

The private investment indicators showed positive growth, reflecting the ongoing development of the private sector and the pivotal role of the Public Investment Fund (PIF) in achieving Saudi Vision 2030.

Due to its significant contribution to the growth of the domestic economy alongside other development funds, PIF prioritizes empowering the private sector. Consequently, the real (non-government) GFCF increased by 4.5% in H1 2024 compared to the same period last year.

The Purchasing Manager Index (PMI), which measures the performance of the non-oil private sector, averaged around 56.3 points in H1 2024. PMI has remained above the neutral level of 50 points for over three years, indicating improvements in new requests and production expansion.

The average coupon rate on domestic and external issuances in H1 2024 was approximately 5.2%, compared to 4.4% in the same period last year. Furthermore, the Saudi Arabian Interbank Offered Rate (SAIBOR) for 3 months witnessed an increase of around 6.3% by the end of H1 2024, compared to about 5.9% for H1 2023.

Given the developments in H1 2024, the Kingdom’s government continues to implement structural reforms and initiatives in the economic and fiscal side as part of Saudi Vision 2030.

These efforts include enhancing public finance by balancing economic growth objectives, maintaining fiscal sustainability, increasing non-oil revenues, and enhancing spending efficiency.

Updated estimates for the 2024 budget indicate a budget deficit of approximately SAR 118 bn (2.9% of GDP). This is primarily due to accelerated spending on social and developmental projects and programs. Consequently, the government will continue borrowing activities to meet 2024 estimated financing needs, according to the report.

By the end of 2024, the public debt is expected to reach about SAR 1,172 bn (28.6% of GDP).

In July 31, the Ministry of Finance published the actual budget for H1 2024, which showed SAR 647.03 billion revenues and SAR 674.75 billion expenditures, thus bringing the actual deficit to SAR 27.73 billion.

Saudi revenues hit SAR 353.6B, expenditure at SAR 368.9B in Q2