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Saudi Arabia's 2026 budget forecasts a deficit of 165 billion riyals (USD 44 billion), reduced from this year's 245 billion riyals shortfall, amid a focus on diversifying the economy. The government is entering the third phase of Vision 2030, emphasizing effective implementation of reforms. Spending priorities are shifting from large real estate projects toward logistics, technology, minerals, and religious tourism. Expenditure is projected at 1.31 trillion riyals, with revenues at 1.15 trillion riyals. The Public Investment Fund is recalibrating projects to ensure they meet strategic goals.
Saudi Arabia has approved its state budget for 2026, forecasting a deficit of 165 billion riyals (USD 44 billion), or roughly 3.3% of GDP. This represents a reduction from this year's estimated 245 billion riyals shortfall, which was driven by lower oil prices and overspending by around 4%. The kingdom, the world's top oil exporter, is now more than halfway through its Vision 2030 plan, a long-term strategy aimed at diversifying the economy away from hydrocarbon revenues. Advertisement
The 2026 budget marks the start of what the government calls the "third phase" of Vision 2030, emphasizing the implementation of reforms to maximize their impact. Crown Prince Mohammed bin Salman described this phase as a period to accelerate growth and create sustainable results that extend beyond 2030, according to state media.
The budget signals a shift in spending priorities rather than overall expenditure. Saudi Arabia's USD 925 billion sovereign wealth fund is moving away from delayed large-scale real estate projects and targeting sectors such as logistics, minerals, artificial intelligence, and religious tourism. Finance Minister Mohammed Al Jadaan stated that while overall spending levels have remained consistent over the last three budget cycles, the focus now is on the sectors being invested in rather than the total amount.
Specific targets in the new budget include welcoming more than 20 million international pilgrims for the Umrah pilgrimage in 2026, up from the expected 15 million this year. Total expenditure is projected at 1.31 trillion riyals, slightly below this year's estimated 1.34 trillion riyals, while revenues are expected to rise marginally to 1.15 trillion riyals from around 1.1 trillion riyals in 2025. Al Jadaan described the deficit as "by design," confirming that fiscal deficits will continue by policy choice until 2028.
This year's anticipated deficit, now expected to exceed twice the budgeted 101 billion riyals, would reach 5.3% of GDP. Revenue is estimated to fall short of targets by 7.8%, while spending is projected 4% higher than planned. Public debt is expected to hit roughly 1.5 trillion riyals by the end of 2025, around 31.7% of GDP, up from 1.2 trillion riyals in 2024, to meet financing requirements. Experts note that although debt levels remain moderate, they could be sensitive to a further drop in oil prices.
Both the Saudi government and the Public Investment Fund (PIF), valued at nearly USD 1 trillion, have reviewed their spending and project priorities. Some ambitious projects were scaled back to achievable objectives. Unlike previous budgets, the 2026 plan did not mention specific megaprojects like NEOM or Sindalah island resort. Al Jadaan confirmed that both the ministry and PIF are recalibrating projects to ensure they deliver intended results.
Source Reuters
5th Jun, 2025
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