Khaberni - On Tuesday, Saudi Arabia approved the 2026 budget, which expects a deficit amounting to 165 billion Riyals (about $44.1 billion), amid continued high spending on reforms aimed at diversifying income sources reliant on oil.
The expected deficit is 3.3% of Gross Domestic Product (GDP), which is less than the deficit estimated to be around 245 billion Riyals ($65.3 billion) in 2025, or 5.3% of GDP, according to the budget published by the Ministry of Finance.
Saudi Arabia’s overall budget includes total public expenditures of 1.313 trillion Riyals ($350.1 billion) and total revenues of 1.147 trillion Riyals ($305.8 billion) with a deficit of 165.4 trillion Riyals ($44.1 billion).
Saudi Arabia, the largest oil exporting country in the world and the largest economy in the Middle East, expects the GDP for the first three quarters in 2025 to have achieved growth of 4.1% on an annual basis, "supported by a growth in non-oil activities by 4.7% and oil activities by 3.9% during the same period," according to the ministry.
It was also pointed out that the economy is expected to grow by 4.6% in the year 2026.
Saudi Arabia, the largest crude oil exporting country in the world, had predicted in September last a deficit amounting to 5.3% of GDP in 2025, a rate more than double the previous estimates, with declining oil revenues and greater than expected increase in spending.
Saudi Finance Minister Mohammed Al-Jadaan expressed "no concerns" about the budget deficit at a press briefing on the eve of the budget approval.
In response to a question from Agence France-Presse, Al-Jadaan said that "the current level of the deficit is a political choice," adding "We need to invest in our economy, and as long as the returns on these investments are higher than the cost of debt, we will continue this approach."
- Major Projects -
Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia, seeks to implement a high-cost reform agenda known as “Vision 2030”.
The vision includes projects like Neom, a massive futuristic city in the desert, and resorts along the Red Sea coast aimed at attracting tourists to Saudi Arabia. However, several reports have indicated that Saudi Arabia reduced the number of these projects in recent months.
The energy industry will closely watch the Saudi budget figures, hoping to glean insights into Saudi expectations for oil revenue direction in the near future.
The kingdom's revenues still largely depend on its oil exports, primarily from the giant oil company Aramco, which saw its net profits decrease in the third quarter of 2025 for the eleventh consecutive quarter.
Al-Jadaan mentioned on Monday that "oil revenues decreased by 14% in 2025 compared to the previous year."
Continued global economic uncertainty and an abundance of supply impacted the oil market most of 2025, leading to a drop in oil prices.
Crude oil prices ranged between $60 and $70 per barrel in the American and global markets, a decrease of about $10 from 2024.
Geopolitical issues, including new US sanctions targeting Russian energy companies last month, helped prevent further decline in the prices of the black gold.
Robert C. Mogielnicki from the Arab Gulf States Institute in Washington told AFP "The Saudis want to strike a balance between sending strong but realistic spending signals. The oil price environment will significantly affect this vital balance."
