Saudi Arabia’s Finance Ministry has issued a pre-budget statement for 2019 saying Riyadh expects to increase spending in 2019 at the same time as reducing the budget deficit.

Expenditure in 2019 is expected to reach SR1.106tn ($294bn), a 7 per cent increase on the planned expenses for 2018.

The higher levels of spending are aimed at boosting economic growth and are due to higher financing charges, subsidies, social benefits, other expenses, capital and investment expenses.

State revenues are also increasing. Government estimates indicate total revenues will reach SR978bn in 2019, an increase of 11 per cent compared with 2018 projections.

The deficit has been reduced in the first half of 2018 to SR41.7bn, a decrease of SR31bn compared with the same period in 2017. The reduction in the deficit came despite a 26 per cent increase in government expenditure during the first half of this year. The Fiscal Balance Programme (FBP) aims to achieve a balanced budget by 2023.

The government has set a ceiling for public debt at 30 per cent of GDP, as announced in the National Transformation Programme.

GDP growth was 1.2 per cent during the first quarter of 2018, compared with a negative growth of 0.8 per cent for the same period in 2017. The Finance Ministry estimates real GDP will reach 2.3 per cent in 2019.

The pre-budget statement also reaffirmed the government’s commitment to privatisation and plans to give the private sector the opportunity to manage state-owned assets.