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In 2024, the Saudi economy is forecast to grow 4.4 per cent. Image Credit: Bloomberg

Saudi Arabia expects to post a slimmer budget next year as the government attempts to balance oil markets through production cuts.

The Kingdom’s Finance Ministry said in a preliminary budget statement on Saturday that it sees a deficit of 79 billion riyals ($21 billion) next year, or 1.9 per cent of gross domestic product.

Spending in 2024 is projected at 1.25 trillion riyals with revenue of 1.17 trillion riyals, the ministry said. The economy is forecast to grow 4.4 per cent.

The $1.1 trillion economy will probably contract this year, according to Bloomberg Economics, largely because of oil-supply cuts enacted by the Saudi government to push up prices. Those have tightened global crude markets at a time of record demand and helped Brent futures climb above $90 a barrel.

The price rise will give the world’s biggest oil exporter more room to sustain high levels of government spending “- much of it on huge projects meant to diversify the economy “- and keep the non-oil sector humming.

Despite Crown Prince Mohammed bin Salman’s diversification drive, oil and petrochemicals are still critical, accounting for around 90 per cent of the country’s exports.

According to the preliminary statement, the country’s debt portfolio will increase while remaining sustainable. The kingdom has been one of the most active bond issuers in emerging markets in 2023, according to data compiled by Bloomberg.