Increased Defense Budget The Kingdom of Saudi Arabia is set to increase its defense budget to $78 billion for the year 2025, a notable rise from the $75.8 billion allocated in 2024. This announcement was made by Ahmad Al-Ohali, the Governor of the General Authority for Military Industries (GAMI), during a statement on Saturday.
Significant Economic Impact According to Al-Ohali, the 2025 military budget will account for 21% of total government spending and represent 7.1% of Saudi Arabia’s gross domestic product (GDP). This increase aligns with a long-term trajectory of 4.5% annual growth in defense spending since 1960, positioning Saudi Arabia as the fifth-largest defense spender globally and the largest within the Arab world.
Focus on Vision 2030 Historically recognized as one of the largest defense importers, Saudi Arabia is actively pursuing its Vision 2030 strategy, initiated in 2016. This strategic framework aims to reduce the country’s dependence on oil revenues and diversify the economy through boosting national production. A key objective of Vision 2030 is to localize 50% of defense spending by 2030, which includes encouraging defense firms to establish regional headquarters in Saudi Arabia.
Ambitious Localization Goals Al-Ohali expressed confidence in achieving and potentially exceeding the 50% localization goal by 2030, citing that the current localization rate of military industries stands at 19.35% as of the end of 2023. He stated in a February 2024 interview with Breaking Defense, „I am really confident that by 2030 we will reach 50 percent [localization], [even] more than 50 percent.”
Developing a Sustainable Military Sector The vision of GAMI is to cultivate a sustainable military industries sector that not only enhances military equipment readiness but also significantly contributes to the national economy. In support of this vision, GAMI recently introduced an „Invest in Saudi Arabia” section on its official website, aiming to guide international companies toward investment opportunities in the Kingdom.
Opportunities for International Investment During his remarks, Al-Ohali emphasized the availability of 74 opportunities within Saudi supply chains for military industries. Among these, 30 opportunities have been prioritized, collectively representing roughly 80% of the Kingdom’s future expenditure on supply chains.
In summary, Saudi Arabia’s increased defense spending for 2025 reflects its commitment to enhancing military readiness and achieving significant economic diversification under its Vision 2030 plan.