Saudi Arabia Plans $350B 2026 Budget With 3.3% GDP Deficit Amid Economic Reform

Saudi Arabia's Ministry of Finance released its pre-budget statement for fiscal year 2026, projecting real GDP growth of about 4.6 percent, primarily driven by expansion in non-oil sectors. The government plans a budget deficit of 3.3 percent of GDP in 2026, with total expenditures estimated at approximately 1.31 trillion Saudi riyals and revenues around 1.15 trillion riyals. Despite the deficit, expansionary fiscal policies aligned with Saudi Vision 2030 will continue, aiming to support economic diversification, social development, and structural reforms that have improved the business environment and private sector role. For 2025, the budget deficit is expected to be larger than previously forecasted, at 5.3 percent of GDP, due to weaker oil revenues and increased spending amid the kingdom's economic transformation efforts. The government intends to finance its budget through local and international funding channels, including bonds and loans, while maintaining flexibility to respond to global and domestic economic challenges. Over the medium term, deficits are expected to persist but at lower levels, reflecting a commitment to balancing transformative spending with fiscal sustainability.