In 2024, Saudi Arabia achieved a major financial landmark by generating around $136 billion in non-oil revenues.. This figure was a key component of the Kingdom’s total government revenues, which stood at about $312.5 billion (SAR 1.172 trillion) for the year. This accomplishment reflects the country's strategic push towards economic diversification under its ambitious Vision 2030 plan, seeking to reduce dependency on oil, foster new industries, and build a sustainable economic future.
Oil Revenues: Still Dominant but Volatile
Despite the progress in diversifying income, oil revenues remained the backbone of Saudi Arabia’s financial strength. In 2024, the Kingdom earned about $201.7 billion (SAR 756.6 billion) from oil, a slight 0.3% increase compared to the previous year. However, oil revenues fluctuated significantly throughout the year due to global market instability.
The average price of Brent crude in 2024 hovered around $81.8 per barrel, while Saudi production averaged 9 million barrels per day. While this allowed for a steady income stream, second-quarter revenues, notably the highest at $56.8 billion, later softened as prices and demand varied amid economic uncertainty in major markets like China and Europe.
Saudi Arabia, through its leadership in OPEC+, strategically managed production levels to balance market supply and maintain price stability. Still, despite these efforts, the unpredictable nature of the global energy market underlined the urgency for Saudi Arabia to diversify its income sources beyond hydrocarbons.
Non-Oil Revenues: A Testament to Vision 2030
The $136 billion generated from non-oil activities was a crucial signal that Saudi Arabia’s economic reforms are bearing fruit. This marked a 10% year-on-year growth, a noteworthy achievement driven by several factors:
1. Taxation Reforms:
- The Kingdom expanded its tax base through Value Added Tax (VAT), customs duties, and excise taxes.
- VAT revenue remained significant after the rate was tripled from 5% to 15% in 2020, with consumer activity remaining robust despite the higher tax burden.
2. Service and Entertainment Sectors:
- Investment in tourism, entertainment, and cultural sectors led to higher government fees and licensing revenues.
- Events like the Riyadh Season, Diriyah Biennale , and new sporting events, including boxing and Formula 1, attracted international attention and boosted domestic spending.
3. Privatization and Investments:
- The government pursued privatization initiatives across sectors like water utilities, healthcare, and airports, generating both immediate income and longer-term efficiency improvements.
- Public Investment Fund (PIF) projects, including NEOM and The Red Sea Project, spurred ancillary economic activities.
Non-oil income came from diverse sources: taxes on goods and services (SAR 70.13 billion) , international trade taxes , and fees for business licenses and services, among others. These gains show Saudi Arabia’s economic base is expanding well beyond traditional energy revenues.
Budget Expenditures and Deficit Management
Government expenditures in 2024 were budgeted at $333 billion (SAR 1.251 trillion), exceeding revenues and leading to a fiscal deficit of around $21 billion (SAR 79 billion), or 1.9% of GDP. Although the deficit grew slightly compared to 2023, it remained within manageable limits due to strategic borrowing and fiscal discipline.
Major areas of spending included:
- Defense and Security:
$71.72 billion allocated to defense, highlighting the Kingdom’s focus on maintaining regional stability amid geopolitical tensions.
- Health and Social Development:
$57.1 billion to improve hospitals, social insurance, elderly care, and public health services. Saudi Arabia expanded digital healthcare platforms and launched initiatives to combat diseases like diabetes and heart conditions.
- Education
$52 billion spent to enhance school infrastructure, invest in digital learning, and promote university-level research innovation, especially in science, technology, engineering, and mathematics (STEM).
- Infrastructure and Housing:
Continued investments supported large-scale housing projects, transportation networks, and "smart city" developments, critical to urban modernization goals.
Though expenditures rose, the government stressed that much of the spending was aimed at "productive investments" rather than consumption, thereby fostering future economic growth.
Debt and Borrowing Strategy
Saudi Arabia turned to debt markets to address its budget shortfall, increasing its public debt to $294.09 billion (SAR 1.103 trillion), which represents 25.9% of its GDP. This level of debt remains relatively low by international standards, giving the government ample fiscal room to maneuver if needed.
Saudi Arabia continued to rely on a mix of domestic sukuk (Islamic bonds), international bond sales, and direct borrowing from financial institutions. The Ministry of Finance reaffirmed its commitment to balanced debt management, aiming to optimize maturities and minimize interest payments to safeguard financial stability.
Economic Growth Outlook
After near-stagnant growth in 2023 (0.03% GDP growth), Saudi Arabia projected a healthy 4.4% economic expansion in 2024, driven by non-oil sectors. Key growth engines included:
- Tourism and Entertainment:
The government aimed for 100 million annual visitors by 2030, with new attractions and major cultural initiatives fueling both domestic and foreign tourism.
- Manufacturing and Industry:
Saudi Arabia encouraged foreign direct investment in manufacturing, pharmaceuticals, and high-tech industries, fostering new industrial hubs.
-Renewable Energy
Significant investments in solar, wind, and green hydrogen projects under the Saudi Green Initiative helped lay the groundwork for a future beyond fossil fuels.
-Technology and Innovation:
Programs like Made in Saudi and partnerships with global tech giants promoted digital transformation, artificial intelligence (AI) initiatives, and smart city developments.
This strong non-oil sector growth was crucial for creating jobs, empowering small and medium enterprises (SMEs), and ensuring Saudi citizens benefited from the economic transformation.
Vision 2030 Progress
Vision 2030, the master plan announced by Crown Prince Mohammed bin Salman in 2016, aims to shift Saudi Arabia from an oil-dependent rentier economy to a vibrant, sustainable, and diversified economy. Key Vision 2030 achievements by 2024 included:
- The unemployment rate among Saudi citizens fell to a record low of approximately 8.5%..
- Women's labor force participation rose dramatically, doubling since 2016 to nearly 36%.
- The Public Investment Fund (PIF) expanded its global investment portfolio, enhancing Saudi Arabia's strategic influence abroad.
- Projects like NEOM, The Line, and Qiddiya progressed, showcasing futuristic urban designs and boosting domestic economic activities.
Though challenges remained — including global economic uncertainties, fluctuating oil prices, and political tensions in the region — Saudi Arabia demonstrated strong resilience and a clear long-term vision.
Conclusion
In conclusion, Saudi Arabia's achievement of $136 billion in non-oil revenues in 2024 signals a pivotal shift in its economic landscape. While oil still plays a critical role, the Kingdom’s commitment to economic diversification, strategic investment, and fiscal responsibility is beginning to yield substantial results.
Through initiatives under Vision 2030, Saudi Arabia is transforming into a more dynamic, diversified economy with stronger foundations for sustainable growth. The 2024 financial results provide optimism that the Kingdom is on the right path, though it must continue navigat
ing both domestic and international challenges carefully to realize its ambitious goals fully.
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