PROJECTS: Low Aramco dividend likely to double 2025 Saudi budget deficit

First published: 15-Jul-2025 11:12:41

Nadim Kawach

A steep fall in dividends by the state oil company Saudi Aramco will double the Gulf Kingdom’s budget deficit in 2025 despite an expected fall in spending, a think-tank in the world’s dominant oil exporter said on Friday.

Saudi Arabia has projected a 2025 budget deficit of around 101 billion Saudi riyals ($27 billion), assuming an average price for its crude of $75 and oil output of 9.5 million barrels per day (bpd).

In the first quarter of this year, the Kingdom recorded a fiscal deficit of SAR 58.7 billion ($15.5 billion) as revenue declined by 10 percent year-on-year due to lower oil revenue, while spending was five percent higher.

“Our fiscal outlook is largely unchanged from our report in the first quarter. The budget deficit will widen in 2025, to 4.3 percent of GDP from 2.5 percent of GDP in 2024,” Jadwa Investment company said in a report.

The consultancy firm expected the actual budget deficit at around SAR202 billion ($54 billion), adding that lower oil prices and minimal Performance-Linked Dividends (PLDs) from Saudi Aramco are driving the wider shortfall.

An expected increase in non-oil revenue and a five percent decline in total budget spending will help limit the budget deficit, it said.

“Taking a closer look at revenue dynamics, we expect budget oil revenue to decline by around 23 percent compared to 2024,” Jadwa said.

It attributed the forecast drop to lower oil prices, which leads to lower royalty and income tax payments from Saudi Aramco to the budget.

A second reason is a 31.5 percent decline in total dividends due from Saudi Aramco this year, Jadwa said, noting that the ordinary dividend has risen by four percent for 2025—an increase of SAR10 billion ($2.6 billion) into the budget.

“However, the PLD for the budget will be minimal at SAR2.7 billion ($720 million) compared with SAR132 billion ($35.2 billion) in 2024.The PLD follows a formula and has dropped away because of lower oil revenue in 2024,” Jadwa said.

“Turning to spending, we expect a decline of five percent in 2025, to SAR1.3 trillion ($347 billion) close to the budget which indicated a decline of 6.4 percent.”

Experts said the wider deficit remains under management in Saudi Arabia as it could be easily funded through bonds given the Kingdom’s massive assets and high credit rating.

“The deficit to GDP in Saudi Arabia is minimal….the debt to GDP is also still under control at around 30 percent, far below than the limit in the European Union,” well-known Saudi economist Ihsan Buhlaiga told Zawya Projects.

Saudi Arabia’s public debt stood at around SAR1.2 trillion ($320 billion) at the end of 2024 and Jadwa projects it to swell to SAR1.4 trillion ($373 billion) at the end of 2025.

(Reporting by Nadim Kawach; Editing by Anoop Menon)

(anoop.menon@lseg.com)

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