Saudi Arabia has cut spending enough this year and probably will not need to make further fiscal adjustments even if crude oil prices weaken, according to the International Monetary Fund on August 4.

The kingdom said in late 2024 it would trim 2025 expenditure to SAR1.285tn ($342bn) after previously overshooting on its targets in a bid to drive progress on its plans to diversify the economy.

While the government has made cuts, expenditures are likely to be higher than budgeted and some one-off spending will continue, according to Amine Mati, the IMF's Saudi mission chief.

The Washington-based lender sees Saudi Arabia's fiscal deficit rising to 4% this year, a level Mati describes as "quite appropriate" given the country's adequate level of foreign reserves. The Saudi government's own projection is for a shortfall of 2.3% this year.

"We don't think any more action on spending cuts or fiscal adjustment are needed for this year," even if oil prices fall to $60 per barrel, Mati said. Global benchmark Brent is currently trading below $70 as the Organisation of the Petroleum Exporting Countries hikes output, and many forecasters including Goldman Sachs Group see a further slide toward $60 later in the year.

The Middle East's biggest economy is spending heavily on Crown Prince Mohammed bin Salman's Vision 2030 strategy, which includes major infrastructure projects and an overarching goal of weaning the economy off its reliance on crude oil revenues.

Already this year, Saudi Arabia has sold almost $15bn of sovereign debt in dollars and euros. The IMF's baseline scenario sees the kingdom continuing to take on debt, increasing the debt-to-GDP ratio to almost 41% by 2030, from below 30% now.

The IMF expects the Saudi economy to grow 3.6% this year, supported by the phase-out of Opec+ production cuts.