Saudi Finance Minister Mohammed Al-Jadaan has stated on multiple occasions and meetings that there is no secret that the Saudi state budget is facing a deficit. Accordingly, the Saudi government decided to minimize its goals and ambitions in Vision 2030 projects due to the lack of funds.
Private sources have recently disclosed that the government and Crown Prince Mohamed bin Salman (MBS) are getting ready to raise taxes in order to address the deficit crisis. According to these sources, the deficit crisis was getting worse every day as a result of projects that MBS and the Public Investment Fund were involved in, up until the point where the Kingdom was unable to finance them.
Nasser Al-Arabi, a member of the National Rally Party, stated that the Kingdom’s general budget deficit, which was disclosed by the Ministry of Finance and reached 12.4 billion riyals in the first quarter of 2024, is a prelude to psychologically preparing the populace for impending financial hardships and more serious crises. This will require levying new taxes on the populace in order to cover the deficit.
According to the Saudi Ministry of Finance, the deficit at the end of the first quarter of 2024 was 12.4 billion riyals, as opposed to the roughly 2.9 billion riyal deficit at the end of the same period in 2023. Additionally, Saudi Finance asserted that the government’s propensity to use expansion spending to carry out plans and initiatives is the reason for the low deficit rate.
According to economists, if MBS keeps spending money on his projects without reevaluating his spending strategies and by introducing and raising new taxes on the public services that the state offers to its citizens and residents, collecting deficit funds from the people’s funds has become a given.
Additionally, the experts condemned the Saudi government for allegedly pursuing MBS’s dreams to the extent that state spending has surpassed state income. This has resulted in a worsening of the budget deficit even with the 15% tax and oil revenue rates. This is a result of the government creating expensive, massive projects like NEOM and the Red Sea projects, in addition to heavily funding annual entertainment projects.
Throughout his years in power, MBS has started selling oil and collecting taxes, Hajj, and Umrah money to pour all of it into fictitious projects from which no profitable funds have entered the state treasury. This has exacerbated the financial crisis in the Kingdom and will only worsen it as more and more of these failed economic policies are implemented.
