RIYADH: Saudi Arabia posted a budget deficit of 12.387 billion riyals ($3.30 billion) in the first quarter of 2024, the finance ministry said on Sunday, after lower oil revenues and increased spending weighed on the economy.

The kingdom needs to spend hundreds of billions of dollars to fund giga-projects aimed at weaning the economy off oil and to boost tourism and the private sector.

Oil revenues reached 181.922 billion riyals, while total revenues were 293.433 billion riyals as non-oil revenues edged higher, although oil still dominates.

Public spending was 305.820 billion riyals surpassing last year’s 283.855 billion riyals.

International Brent crude has averaged around $83.50 so far in 2024, while Saudi Arabia needs oil at $96.2 to balance its 2024 budget, the IMF forecasts.

For the full year, Saudi Arabia has projected an annual budget deficit of 79 billion riyals, and has said it will scale back some of its giga projects.

“There are challenges... we don’t have ego, we will change course, we will adjust, we will extend some of the projects, we will downscale some of the projects, we will accelerate some of the projects,” Saudi Arabia’ Finance Minister Mohammed Al Jadaan said last week, speaking at the World Economic Forum meeting in Riyadh.

The Organization of the Petroleum Exporting Countries and allies (OPEC+) are expected to maintain curbs on production to support the market, and analysts predict Saudi Arabia’s budgetary situation will improve.

“The deficit is contained in Q1 of 2024, and the overall fiscal position should benefit from a higher average oil price from Q2,” Monica Malik an economist with Abu-Dhabi-based ADCB, said. “This is in line with our expectation of a smaller than budgeted deficit in 2024.”