Saudi Arabia has rewritten its budget forecast for next year, saying it expects a deficit instead of a surplus as it ramps up spending and tackles uncertainty in oil markets.

The Finance Ministry also revised its previous forecast of surpluses every year until 2025, now expecting deficits until at least 2026, according to a preliminary budget statement published Saturday.

The $1.1 trillion economy will narrowly avoid a contraction this year, according to Finance Ministry forecasts. By contrast, Bloomberg Economics expects the Saudi government’s oil supply cuts to shrink the economy by about 0.7% this year, a major swing from being the fastest-growing Group-of-20 nation in 2022.

Under Crown Prince Mohammed bin Salman, the country’s de facto ruler, Saudi Arabia is pushing to diversify its oil-dependent economy, building up new domestic industries including electric car-making, tourism and logistics. But the plans are hugely expensive, putting strain on government finances.

Spending in 2024 is projected at 1.25 trillion riyals ($333 billion), 10% more than estimates made last year, the ministry said. Although the new forecasts put spending in 2024 at slightly lower levels than in 2023, the governments tends to overshoot expenditure targets.

Read: Saudi Oil Cuts Throw Last Year’s Standout Economy Into Slow Lane

Inflation and supply chain disruptions have dampened global growth and in response Saudi Arabia is “working to expand government spending that has a transformative effect, while maintaining fiscal sustainability in the medium and long-term,” according to the preliminary budget statement.

The government is expecting revenue next year to be 1.18 trillion riyals, a slight decrease from this year based on what it called “conservative estimates of oil and non-oil revenue.” That could be a reflection of continued uncertainty over oil demand, with fears of a recession continuing to haunt the US and disappointing economic data from China.

That will leave the kingdom facing a deficit in 2024 of 79 billion riyals, equal to about 1.9% of economic output. This year’s deficit is projected at 82 billion riyals, equal to about 2% of economic output. The economy is forecast to grow 4.4% next year.

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A recent rise in crude prices will give the world’s biggest oil exporter more room to sustain high levels of government spending and drive the non-oil sector, the main engine of job creation.

Despite the diversification drive, oil and petrochemicals are still critical, accounting for around 90% of the country’s exports.

According to the preliminary statement, the country’s increasing debt portfolio will remain sustainable. The kingdom has been one of the most active bond issuers in emerging markets in 2023, according to data compiled by Bloomberg.

--With assistance from Fahad Abuljadayel.

(Updates with details throughout)