Defense spending in Saudi Arabia performed an abrupt turnaround in 2022.
The oil-rich nation had planned to reduce military budgets by 10% but now expects to have spent 43% more than was planned for the year.
Actual spending on defense in 2022 is projected to have reached SAR245 billion ($65.2 billion) compared to a budgeted level of SAR171 billion, a budget statement shows.
Ostensibly this means Saudi defense spending reached record levels in terms not adjusted for inflation in 2022, surpassing the SAR224 billion allocated in 2017. If 2023 spending matches the nation’s budget plan, it will break that record again, as Saudi Arabia has announced it will boost spending on defense by 5.7% for 2023, rising from SAR245 billion ($65.2 billion) to SAR259 billion.
The rise means military spending will be the fastest growing major element within the Saudi state budget for both 2022 and 2023 and brings defense expenditures to around 8% of GDP.
The move marks a major change to the prevailing trend for the Saudi defense budget, with spending having been reduced in each of the five previous annual budgets–the longest-ever sustained cuts in Saudi defense spending. The shift comes in the wake of a 10-month period of higher oil prices due to the war in Ukraine, reaching levels above $120 a barrel in March 2022 in the immediate aftermath of Russia’s invasion.
The budget statement provides limited details on the cause of the large 2022 revision or the reasons for the 2023 increase, other than the goal of enhancing the local defense sector and contracts signed at the inaugural World Defense Show (WDS) in Riyadh in March. The statement does say that SAR29.7 billion in contracts were finalized on the fringes of the WDS. But that would only account for around half the adjustment at most. Furthermore, with no trade show scheduled for this year, the additional 5.7% increase in defense spending planned for 2023 suggests the revision for 2022 is not solely related to the WDS.
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