Saudi Arabia approved its 2025 state budget on Tuesday, forecasting $315.7 billion in revenue and $342.1 billion in spending, leading to a deficit of $26.4 billion.

The defense sector received the largest share, with an allocation of $72.5 billion, reflecting a 5% increase compared to 2024 estimates.

The numbers come as the kingdom makes significant strides in its quest to localize defense production, increasing the localization rate of military spending from 4% in 2018 to 19.35% by the end of 2023. 

The announcement, made on Nov. 21 at the 2024 Local Content Forum in Riyadh by Ahmad Abdulaziz Al-Ohali, governor of the General Authority for Military Industries, underscored this growth. GAMI, through new policies and legislation, has played a pivotal role in regulating and stimulating the sector, thereby enhancing the competitiveness of local products. Ohali also highlighted a rise in licensed entities within the military industries sector, now numbering 296 as of Q3 2024 — an encouraging sign for the industry's future.

This progress carries major implications for the kingdom's economy and defense capabilities, reducing reliance on arms imports while fostering the growth of its domestic defense industry.