Saudi Arabia’s capital expenditure on projects and other investment activity in 2024 is projected to be lower than in 2023 when such spending rose to one of its highest levels, according to a think-tank in the Gulf Kingdom.

Capital spending is expected to be around 189 billion Saudi riyals ($50.4 billion) in 2024, nearly 6.9 percent below the 2023 estimate, the Riyadh-based Jadwa Investment said in a budget report sent to Zawya Projects on Monday.

The report showed there was a 29 percent surge in estimated actual capital expenditure in 2023 mainly because of increased spending on uncompleted projects that were either stalled or delayed during the Covid pandemic.

The report saw a scope for an increase in total spending on the grounds budgeted expenditure for 2024 would account for nearly 41.4 percent of non-oil GDP, about 4.5 percentage points lower than the 2023 spending.

In addition, there is plenty of scope for additional debt issuance to fund this, with central government debt currently below 25 percent of GDP, the report noted.

“On one level, a decline in capital spending is plausible given that the spike in 2023 capital expenditure was partly a result of the delivery of Covid-19-delayed infrastructure projects… indeed, the projection for 2024 is still high in recent historical terms,“ it said.

“A reduction in budgeted capital spending is also understandable given the current oil price environment. That said, our bias is towards higher-than-budgeted capital expenditure next year given the welter of outstanding projects to be delivered.”

(Writing by Nadim Kawach; Editing by Anoop Menon)

(anoop.menon@lseg.com)

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