Tightening the belt

Ministries now have to spend less (in some cases, a lot less). Government entities have been instructed to cut non-essential expenditures by as much as 50%, people familiar with the matter tell EnterpriseAM.

What’s being cut? Education allowances previously paid to some government employees to cover their children’s school fees will not be renewed next year. New hiring has been paused at several government entities until further notice. Per diem travel allowances have been reduced, and non-essential business travel restricted, our sources tell us.

The targets: The cuts are targeting discretionary and operational spending across ministries, while strategic projects and capital investment in gigaprojects remain largely unaffected.

The reason

Tightening the belt: Riyadh is moving to contain costs following a budget deficit of USD 74 bn last year, more than double what the government had originally projected. Lower and more volatile oil prices have squeezed revenues, widening the fiscal gap as spending continued to rise.

Don’t blame the war: Regional tensions added a new layer of uncertainty, though the spending controls predate the current conflict and were introduced as part of a broader fiscal management effort.

Why it matters

For companies that depend on government procurement, travel budgets, or discretionary ministry spending, the tightening could weigh on activity over the coming months. Riyadh is becoming more selective about where public money goes, and day-to-day government operations are no longer insulated from that discipline.