Khaberni - There are notable observations that can be read from the first glance in the Saudi budget for the new year, through a review of the budget expenditure items, as military spending tops the budget allocations in 2026 according to the functional classification, as has been the case in several past years. According to the figures announced by the Saudi Ministry of Finance, the allocations for military spending amounted to 240 billion riyals (equivalent to 64 billion dollars), achieving a ratio of 18.2% of the total expenses in the new budget totaling 1.3 trillion riyals. This focus on military spending is undoubtedly imposed by the nature of the conditions that the Middle East has been undergoing for decades. Education spending comes in second place after military spending, with allocations estimated at 202 billion riyals, and reaching 15.3% of the total budget expenses. (The dollar equals 3.75 Saudi riyals)..
Through reviewing some details of the projects that will receive the estimated allocations for the education item, we found that there is an interest in learning Chinese. There is a program to expand the teaching of the language, empowering Saudi students to speak Chinese and communicate with its speakers, and this program aims to benefit 85.9 thousand students within the Kingdom to China, in addition to sending 325 teachers to study Chinese, and obtaining a master's in teaching that language from Chinese universities. The budget numbers for 2026 in Saudi Arabia show an interest in other social aspects besides education, where the health and social development allocations were estimated at about 259 billion riyals, which confirms the continuation of the support policy through grants and aid, as well as health care services.
However, Saudi Arabia's social and economic development plans should result in reducing poverty rates, which were observed by the ESCWA, where the poverty rate in Saudi Arabia was the highest among Gulf countries, estimated at about 13.5% of the total Saudi population, in 2021, and with increasing economic pressures, the poverty rate is expected to increase currently than what it was. The Saudi budget for the new year is significant, as it concerns one of the largest oil producing and exporting countries in the world, and has an undeniable impact on the global oil market, as has been clearly evident more than once, especially after forming the oil alliance "OPEC+".
Decline in public investments
According to the financial statement for the 2026 budget, public revenues were estimated at about 1.14 trillion riyals, and public expenses at about 1.31 trillion riyals, thus resulting in a deficit in the budget of 165 billion riyals. According to the economic classification, wages and salaries account for the lion's share of the budget allocations for the coming year. The allocations for wages and salaries were estimated at 584 billion riyals, representing 44.4% of the total expenses, followed by the item of goods and services related to the government, at about 247 billion riyals, and a percentage of 18.8% of the total expenses.
However, it is noted that the allocations for public investments in the 2026 budget, declined to 162 billion riyals, after having been 172 billion riyals last year, and the financial statement for the budget justified this decline, by achieving the targets, and completion of a number of projects.
And by looking back at the spending on public investments in the budget over the past years, according to the numbers of the financial statement, we found that spending on public investments has been increasing from 2021 until 2024, as in 2021 this spending amounted to 117 billion riyals, and rose in 2024 to 191 billion riyals, i.e., the increase during that period amounted to 74 billion riyals, and a percentage reached 63%, while the trend regarding spending on public investments declined in 2025 and2026, to be 172 billion riyals in 2025, and estimated to decrease to 162 billion riyals in 2026, i.e., the decrease in 2026 will be about 10 billion riyals, reaching a percentage of 5.8%.
Yes, there are other sources for investing in the kingdom, top of which is the spending associated with Vision 2023 projects, as well as investments of public funds, and also the national and foreign private sector, but the decline in public investment allocations in the budget raises questions seeking answers.
And from the clear observations from analyzing the Saudi budget data for 2026, with regard to the economic division, it is found that investment spending amounts to 12.3% of the total public expenses, while current spending 87.7%, which reflects the direction of the Saudi economy after the year 2015, as there has been an adoption of giving greater space to the private sector, and the government relinquishing economic activity, which we notice through privatization projects, especially in massive historical projects, in the Kingdom, and foremost among them the Aramco oil company, where a percentage of the company's capital was allocated for the benefit of the private sector, although the Saudi government still controls the majority of the company's capital.
