Riyadh confirms capital expenditure cuts
7 May 2025

Saudi Arabia has reported a 19% drop in government capital expenditure (capex) during the first quarter of this year compared to the same period last year. Capex spending in Q1 2025 was SR27.8bn ($7.4bn), down from SR34.5bn in Q1 2024.
The Ministry of Finance reported the drop in expenditure in its Quarterly Budget Performance Report for Q1 2025.
The government’s reduction in capex occurred at the same time as a drop in contract awards. According to regional projects tracker MEED Projects, there was a significant reduction in contract awards during Q1 2025.
There were $16.9bn of contract awards in the kingdom during Q1 2025, which includes private and public sector clients – including the Public Investment Fund (PIF) and its subsidiary development companies, as well as public-private partnership (PPP) projects.
The number of contract awards has also declined. According to MEED Projects, there were 108 contract awards during Q1 2025, which is down from 191 during Q1 2024 and 186 in Q4 2024.
Big deals
The largest project deal during Q1 2025 was the $2.2bn PPP deal awarded by Saudi Water Partnership Company (SWPC) to develop and operate the kingdom’s second independent water transmission pipeline (IWTP). The project involves building a 587-kilometre pipeline that can transmit 650,000 cubic metres a day of water between Jubail in the Eastern Province and Buraydah in the Qassim region. A developer team comprising local companies Aljomaih Energy & Water, Nesma Company and Buhur for Investment Company was selected for the project.
Only two other contract awards were valued at over $1bn. Saudi Aramco awarded Larsen & Toubro Energy Hydrocarbon, a subsidiary of India’s Larsen & Toubro Group, a $1.5bn contract to build a large-scale carbon capture and storage hub in Jubail Industrial City.
Gigaproject developer Diriyah Company awarded the other $1bn-plus deal. It awarded a joint venture of local firm El-Seif Engineering & Contracting, Beijing-headquartered China State Construction Engineering Corporation and Qatari firm Midmac Contracting a $1.3bn contract to build the Royal Diriyah Opera House.
The total value of contract awards in Q1 2025 was down by almost half compared to the $33.5bn of contract awards made during Q1 2024. On a quarterly basis, the drop is more than 60% compared to the $42.7bn of contract awards made during Q4 2024.
Budget deficit
For the broader economy, Saudi Arabia ran a deficit of SR58.7bn during Q1 2025, which was fully financed through borrowing, as there were no withdrawals from government reserves.
Public debt increased in both domestic and external components. Domestic debt closed at SR797bn, and external debt closed at SR531.7bn, indicating active debt management strategies to finance the deficit.
Most recently, the National Debt Management Centre announced the closure of its April 2025 issuance under the government’s Saudi riyal-denominated sukuk programme, with a total allocation amounting to SR3.710bn.
The sukuk issuance was structured into four distinct tranches to cater to varying investor needs. The first tranche, valued at SR1.315bn, is set to mature in 2029. The second tranche, amounting to SR80m, will mature in 2032. The third tranche, with a size of SR765m, is scheduled for maturity in 2036, while the fourth tranche, the largest at SR1.55bn, will mature in 2039.
In Q1 2025, total revenues reached SR263.6bn, with oil revenues accounting for SR149.8bn. This signifies a notable 18% decrease in oil revenues compared to the same period in 2024.
Also, oil income in the first quarter of this year accounted for 56% of total government revenues, down from 62% in the same period last year.
The slide in oil revenues is mainly due to lower crude oil prices, with the first quarter average for global benchmark Brent declining by 15% to around $75 a barrel compared to the same period in 2024.
Oil production
Oil production cuts by the Opec+ alliance also led to a fall in oil revenues for Saudi Arabia. The kingdom’s crude output declined by 1% in the first quarter to 8.95 million barrels a day (b/d), according to Opec data.
Saudi Arabia and Russia-led Opec+, however, began unwinding 2.2 million b/d of oil production cuts from April, with the coalition recently announcing a further output hike of 411,000 b/d in June. This move could result in an increased oil market share for Saudi Arabia, bringing in more oil revenues for the kingdom in the second quarter.
Non-oil revenues increased by 2%, reaching SR113.8bn, indicating some success in diversification efforts. Taxes on goods and services and other revenues contributed to this rise.
Total expenditures stood at SR322.3bn, which was a 5% increase on Q1 2024. Although capex decreased, other areas of spending increased.
Social spending
Notably, social benefits saw a significant 28% increase, reflecting the government’s commitment to social welfare programmes. Compensation of employees and use of goods and services also experienced increases.
For sectors, health and social development saw a 19% increase in actual expenditure compared to Q1 2024. This indicates a strong focus on these areas. Public administration also experienced a notable 14% increase.
Sectors such as municipal services and economic resources recorded slight decreases in spending.
The Finance Ministry report also provides insights into the government’s reserves and current account balances, with closing balances of SR393bn and SR91bn, respectively.
MEED’s April 2025 report on Saudi Arabia includes:
> GOVERNMENT: Riyadh takes the diplomatic initiative
> ECONOMY: Saudi Arabia’s non-oil economy forges onward
> BANKING: Saudi banks work to keep pace with credit expansion
> UPSTREAM: Saudi oil and gas spending to surpass 2024 level
> DOWNSTREAM: Aramco’s recalibrated chemical goals reflect realism
> POWER: Saudi power sector enters busiest year
> WATER: Saudi water contracts set another annual record
> CONSTRUCTION: Reprioritisation underpins Saudi construction
> TRANSPORT: Riyadh pushes ahead with infrastructure development
> DATABANK: Saudi Arabia’s growth trend heads up
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Zamil Steel wins $82m Qiddiya tennis centre contract21 October 2026
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Building resilience into infrastructure delivery21 October 2026

The regional disruptions earlier this year tested Gulf supply chains, challenging the movement of goods and construction materials and raising questions about the ability of infrastructure programmes to maintain momentum.
For the UAE Ministry of Energy & Infrastructure, the experience reinforced the importance of the systems that support project delivery, from transport networks and customs procedures to domestic manufacturers and international suppliers.
“The disruption reinforced an important principle: infrastructure resilience is ultimately about the ability of the national system to continue operating under pressure,” says Mohammed Al-Mansoori, undersecretary for infrastructure and transport affairs.
Supply resilience
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For infrastructure projects, the ministry worked with local manufacturers and suppliers to identify alternative sources of road and construction materials meeting the required technical specifications and quality standards. This helped reduce reliance on disrupted international supply routes and support ongoing projects.
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The ministry is planning to build on this experience by diversifying suppliers, strengthening domestic manufacturing and improving supply-chain monitoring.
Resilience is increasingly being incorporated into procurement planning. For critical materials and services, the ministry aims to identify risks early, broaden the pool of qualified suppliers and ensure viable alternatives are available.
The approach supports the UAE’s wider industrial objectives, including the national in-country value programme, which seeks to direct a greater share of procurement expenditure into the national economy.
“Our objective is not simply to purchase more locally. It is to help create competitive national supply chains,” Al-Mansoori says.
Domestic suppliers must be able to meet the technical requirements, quality standards and volumes demanded by major infrastructure programmes. Localisation is therefore about developing competitive industrial capabilities while shortening supply chains, improving responsiveness and encouraging investment.
“Localisation is not simply a procurement choice; it is an investment in national capability and long-term resilience,” Al-Mansoori says.
The ministry is also working with contractors to manage pressures from fluctuating material, insurance and transport costs. Its approach combines commercial discipline with early engagement to prevent external pressures from affecting project delivery.
“Our approach is based on early engagement, transparency and disciplined commercial management,” Al-Mansoori says. “Long-term infrastructure delivery depends on strong contractors as much as it depends on strong contracts.”
Contractors remain responsible for normal market and contractual risks, but the ministry seeks to assess exceptional pressures objectively, supported by evidence of their impact on costs and schedules. Realistic planning, early procurement and proactive risk management also help maintain momentum.
“The objective is to strike the right balance between protecting the government’s commercial interests and securing best value for money, while maintaining an efficient, sustainable contracting market capable of continuing to deliver strategic infrastructure projects,” Al-Mansoori says.
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Project delivery
The ministry’s focus on measurable outcomes is reflected in the Emirates Road enhancement project, which involves widening approximately 25 kilometres of Emirates Road from three to five lanes in each direction, alongside major improvements to Interchange No. 7.
The works are expected to increase road capacity by up to 65% and reduce journey times by up to 45%.
The project illustrates the ministry’s emphasis on assessing infrastructure by the benefits it delivers, rather than simply the scale of construction.
“Infrastructure success should be measured by the value it creates – not just by the kilometres we build,” Al-Mansoori says.
That principle is increasingly important as the UAE balances new construction with the long-term costs of operating and maintaining its assets. Decisions made during planning and construction can influence maintenance requirements, operating costs and performance for decades.
For Al-Mansoori, resilience, domestic capability and effective delivery are closely connected. Stronger local supply chains can reduce exposure to external shocks, while closer engagement with contractors can help projects withstand cost pressures.
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Riyadh tenders Expo 2030 Adaptation and Innovation Pavilion21 October 2026

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Expo 2030 Riyadh has tendered the design-and-build main contract for the Adaptation and Innovation Pavilion in the exhibition’s Technology District.
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The facility is being designed to accommodate a minimum of 20,000 visitors a day at peak periods, with an anticipated average of about 15,000 visitors a day. The project targets LEED Gold certification.
The tender was issued on 1 October, with bids due on 6 January 2027.
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Mubadala Bio lands Lilly logistics deal21 October 2026
Mubadala Bio, the life sciences subsidiary of Abu Dhabi state investor Mubadala Investment Company, has signed an agreement with US drugmaker Eli Lilly to localise the packaging and logistics of Lilly’s glucagon-like peptide-1 (GLP-1) medicines in Abu Dhabi.
The work will take place at a 125,000-square-metre site in Khalifa Economic Zones Abu Dhabi (Kezad), which includes packaging and warehousing facilities. Mubadala Bio said the facilities would strengthen its pharmaceutical contract manufacturing, packaging and logistics capabilities and its ability to serve international clients from the UAE.
The packaging and logistics activities will be introduced in phases and will be subject to technical, quality and regulatory requirements. The companies did not disclose the value of the agreement or a timeline for the first phase.
The Emirates Drug Establishment approved Lilly’s oral GLP-1 drug Foundayo (orforglipron) for chronic weight management in April. The companies said this made the UAE the second country in the world to register the medicine.
In Abu Dhabi, the treatment is available to eligible patients under a weight management programme launched by the Abu Dhabi Department of Health and the Abu Dhabi Public Health Centre in June 2025. The UAE was also an early launch market for Lilly’s injectable treatment Mounjaro (tirzepatide) in August 2022.
Mubadala launched Mubadala Bio in 2025 to expand domestic drug manufacturing and distribution, with a focus on national drug security. It is one of Mubadala’s designated national champions, set up to support strategic sectors. At launch, its combined facilities covered 110,000 square metres, with an annual capacity of more than 2.5 billion tablets and capsules and 120 million intravenous and injectable units.
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Chinese/local joint venture wins Qiddiya stadium facade21 October 2026
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A joint venture of China’s Fangda Group and Saudi Arabia’s IKK Group has secured a SR1.15bn ($306m) contract to deliver curtain wall facade works for the Prince Mohammed Bin Salman Stadium in Qiddiya City, Riyadh.
The contract was awarded by the joint venture of Spain’s FCC Construccion and local contractor Nesma & Partners, which is building the stadium under an estimated SR15bn ($4bn) main contract awarded by Qiddiya Investment Company (QIC) in October 2024.
The IKK-Fangda joint venture will design, supply and install curtain wall façade systems for the main stadium (Lot 1), as well as for the museum and ancillary buildings (Lot 3).
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The facade award follows the appointment of Elegancia Arabia, a subsidiary of Qatar-based Elegancia MEP and Estithmar Holding, to deliver the stadium’s mechanical, electrical and plumbing works.
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The project is being designed by US-based consultant Populous.
It is among the venues planned for the 2034 Fifa World Cup and will also host the Saudi King Cup, the AFC Asian Cup and the 2034 Asian Games.
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Zamil Steel wins $82m Qiddiya tennis centre contract21 October 2026
Advanced Building Industries Company (Senaat) has announced that its subsidiary, Zamil Structural Steel Company (Zamil Steel), has secured a SR308m ($82m) contract for the National Tennis Centre in Qiddiya City, Riyadh.
The 19-month contract was awarded by the joint venture of France’s Bouygues Batiment International and local contractor Almabani General Contractors Company.
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MEED reported in June that the Bouygues Batiment International-Almabani joint venture had started construction of the National Tennis Centre.
The development will include 30 tennis courts, comprising 28 hard courts and two clay courts. The main Centre Court will seat 15,000 spectators and feature a retractable roof.
The facility is being designed to meet standards set by the Association of Tennis Professionals, the Women’s Tennis Association and the International Tennis Federation.
The development will also include an 8,000-seat multipurpose arena with a retractable roof, known as Court 3. Other facilities include a 5,000-seat Court 1, a 2,000-seat Court 2, six competition courts, six indoor courts and 14 practice courts. Each outdoor match court will provide 450 seats.
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Qiddiya Investment Company officially announced the project on 15 June. The developer has said the centre will be the region’s largest tennis complex and will host international tennis events.
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