Saudi Arabia balancing ambition with fiscal prudence

Fiscal prudence and recalibration

With over 5,000 projects valued at US$5 trillion currently underway, the Kingdom of Saudi Arabia has made significant progress in transforming its economic and social landscapes as part of its ambitious Vision 2030 objectives.⁶

In its 2024 review of Saudi Arabia, the International Monetary Fund (IMF) acknowledged the country's successful economic transformation, highlighting improvements in the business environment, job creation and a robust non-oil sector growth of 3.8%.⁷ However, it also emphasised the need for fiscal prudence, safeguarding financial stability and continuing structural reforms to support sustainable and inclusive growth in the Kingdom.

With the Saudi budget 2025 forecasting a US$27 bn deficit,⁸ the government faces the challenge of balancing ambitious investment targets while managing expenditure prudently. This means the reprioritisation of expenditure and a pivot towards value-based spending to maximise the economic and social impacts of public expenditure. This includes initiatives to strengthen the private sector, develop tourism offerings and transport infrastructure, improve local employment rates, while continuing spending on renewable energy and giga projects. Key goals outlined in the Saudi budget include targeting financial savings of up to SAR8 bn, increasing the use of emerging technologies in government agencies to 50% and boosting foreign investment to SAR139 bn, compared to SAR96bn in 2023. ^9,10 In the budget announcement, the Crown Prince also underscored the crucial role of sovereign wealth funds and development funds as the key channel for these public investments.

Infrastructure and quality of life investments, with a focus on Riyadh

The Kingdom is advancing key quality of life projects and developing world-class infrastructure, which will also enable it to host major global events.

Substantial investments have already been made in urban infrastructure projects that are reshaping Saudi Arabia's cities into more liveable and sustainable environments, and to improve residents’ quality of life. As of 2024, the Kingdom has already invested SAR4.9tn (US$1.3tn) in infrastructure, significantly expanding residential, commercial and hospitality developments.¹¹

This momentum is evident particularly in Riyadh, the capital city, as the government recognises the urgent need to invest in transport and urban infrastructure. The Royal Commission for Riyadh City is targeting a population of 10m by 2030 to support the city’s growth ambitions, nearly a third of the current national population, and then eventually to 15m.¹² The Riyadh Metro, which began operations in December 2024 can carry up to 3.6m million passengers daily. Designed to reduce congestion and improve connectivity, it rivals the service quality of similar metro systems in other world-class cities.¹³ The 85 metro stations are seamlessly integrated with the Bus Rapid Transit system, which completed its third phase last year. The bus network accommodates 500,000 passengers daily, with 2,860 stops spread across the city.¹⁴

The metro network will accelerate the progress of other major projects in Riyadh, such as King Abdullah Financial District (KAFD) - home to several regional corporate headquarters and a popular destination with its array of restaurants and shops. Close to KAFD in northwest Riyadh, ground has been broken on New Murabba, an ambitious giga project set to redefine modern living.¹⁵ The development will have the iconic Mukaab tower as its centrepiece, while also making available housing units for 400,000 people.

Other projects in and around Riyadh are at more advanced stages. Diriyah Gate is restoring the original capital of the Saudi state as an important heritage and tourism destination. King Salman Park will provide a much-needed green space in the heart of the city, nearly five times the size of New York’s Central Park, while Green Riyadh is planting millions of trees across the city. Qiddiya Entertainment City, to the west, will provide family recreation opportunities and serve as a major draw for visitors, while the Sports Boulevard project, launched in 2019, will integrate sports, cultural, and environmental features to promote healthier lifestyles for residents. 

Saudi Arabia is also actively building the infrastructure needed to host mega events that will put it on the global stage. Hosting the 2034 FIFA World Cup will undoubtedly be a historic milestone for Saudi Arabia and a moment of immense pride for Saudis. More than just a sporting event, it will showcase the Kingdom’s readiness to welcome the world and affirm that it is open for business. 

Work is already underway on the venues: New Murabba and Qiddiya will host two of the eight stadiums in Riyadh, while other host cities include Jeddah, King Abdullah Economic City and NEOM. Delivering the tournament alongside major events such as the 2027 Asian Cup, the 2029 Asian Winter Games in Trojena and the Riyadh Expo 2030 will require significant planning, investment, and resource management. The prioritisation on infrastructure assets, along with adoption of advanced technologies to enhance audience experiences, will be critical to ensuring the success of these events in the coming years. 

References

_{6) Arab News, Saudi Arabia leverages project management to achieve Vision 2030 milestones
7) Arab News, IMF highlights Saudi Arabia’s economic gains and Vision 2030 progress in latest review
8) Arab News: Saudi Arabia approves FY2025 budget, forecasts $27bn deficit amid expansionary spending
9) Ministry of Finance, Saudi Arabia Budget Statement FY25
10) Saudi Press Agency: FDI Inflow Into Saudi Arabia Exceeds the National Investment Strategy by 16% in 2023
11) Arab News: Giga-projects fueling real estate boom in Saudi Arabia
12) Bloomberg, 26 April 2024, Saudi Capital to Cut Population Goal as City Reviews Strategy
13) Arab News: Riyadh launches Middle East’s largest urban rail network
14) Royal Commission for Riyadh City, King Abdulaziz Project for Riyadh Public Transport
15) New Murabba, 15 October 2024, New Murabba Reaches New Heights: Over 10 million Cubic Meters Excavated}