What you need to know about Saudi Arabia's 2019 'massive' budget

On Tuesday, Saudi Arabia revealed its 2019 annual budget and it's been dubbed the kingdom's largest yet.

The country is estimated to spend 1.106 trillion riyals ($295 billion,) a 7 percent increase from its 2018 budget. 

"Saudi government's spending is the main driver of growth. The idea is to stimulate the growth of the private sector," said Mazen Alsudairi, head of research at Al Rajhi Capital in Riyadh, according to The National.

This comes as the kingdom aims to diversify its economy to reduce its reliance on oil under Vision 2030. 

The announcement of such a massive budget has raised questions among many. Here's what you need to know:

The kingdom's budget will see an increase in spending in various sectors, despite the fact that Saudi Arabia is still struggling with a fiscal deficit. 

Low oil prices have hurt the kingdom's economy, as its deficit came in at 136 billion riyals ($36.25 billion) in 2018. The number is much lower than the projected deficit of 195 billion riyals ($51.9 billion) for the year. 

The government has pledged to eliminate the deficit by 2023; it has also taken aggressive steps to boost non-oil revenues, including the first-ever value-added-tax which took effect on Jan. 1.

According to The National, the "fiscal deficit is forecast to narrow to 4.1 percent of GDP in 2019 from an estimated 5 per cent in 2018."

At the beginning of 2018, a government allowance scheme was established, allowing low and middle-income Saudi households to benefit from additional funds.

The funds meant to curb the effects and strains of the kingdom's economic reforms on less fortunate families, a source explained, according to media reports.

Officials have estimated these allowances to cost more than $13 billion. Some analysts believe the newly implemented scheme has contributed to the kingdom's sluggish growth.

Dubbed the "royal allowances," the funds - amounting to 1,000 riyals ($266) - will continue to be given to civil servants and military personnel.

The kingdom also plans to increase student benefits by 10 percent in 2019. 

In a statement posted to his Twitter account, Saudi's Energy, Industry and Mineral Resources Minister Khalid Al-Falih said the kingdom's 2019 budget will allocate 33 billion riyals ($8.79 billion) to various sectors.

These include the energy, industrial, mining, and logistics sectors.

In 2017, the kingdom announced its plans to invest tens of billions in renewable energy. Saudi Arabia aims to invest between $30 to $50 billion in renewable energy by 2032.

Renewable energy initiatives are an integral part of the kingdom's Vision 2030. John Sfakianakis, director of economic research at the Riyadh-based Gulf Research Center, told Arab News that Riyadh "wants to balance economic needs against environmental goals as it has considerable solar power potential and is eager to reduce its use of fossil fuels."

The kingdom is also looking to develop geothermal power - steam from within the earth - as its strategic plan to diversify its energy sector. In Dec. 2016, the state-owned oil company, Saudi Aramco, announced the launch of the kingdom's very first wind turbine. Wind power will be used to power the company's plant in Turaif.

In recent years, Saudi Arabia has taken major steps to make the "Saudization" process a reality, however, it seems as though it hasn't been going as planned.

The kingdom's "Saudization" process aims to nationalize its workforce by reducing its reliance on foreign labor. Thus, non-Saudis have seen fewer job opportunities available to them in recent months. The number of foreign workers declined by 6 percent in the first three months of 2018.

More than 234,000 expats left the kingdom during the same period. In just 18 months, more than 800,000 expats have left the country. The number exceeds an estimation in 2017 which claimed 670,000 expats would leave Saudi Arabia by 2020. However, the departure of expats has not helped decrease the unemployment rate among Saudi nationals.

According to data released by the General Authority for Statistics, the unemployment rate peaked at 12.9 percent. Based on data collected as early as 1999, this marks the highest rate ever documented by the official statistics agency, according to The Daily Star.

According to Reuters, the government expects to witness growth in non-oil industries as they are key to creating jobs. However, suggested "fees for hiring expat workers" have made it tough for private sector companies to excel. 

Private businesses will be charged between $80 and $107 monthly for each foreign worker hired. On Tuesday, officials gave "no sign that next year's planned increases in the fees might be delayed," according to Reuters.

Non-oil revenue has increased to 32 percent in 2018 from 12 percent in 2014.