RIYADH — Saudi Arabia has approved its 2026 state budget, forecasting a reduced fiscal deficit as it shifts spending toward strategic sectors such as industry and logistics to strengthen non-oil revenue.
The government expects a deficit of 165 billion riyals ($44 billion), equal to around 3.3% of GDP — an improvement from the 245 billion riyals anticipated for 2025 after lower oil prices, production cuts, and higher-than-planned spending widened the shortfall.
Saudi Arabia is now more than halfway through its Vision 2030 economic diversification program, championed by Crown Prince Mohammed bin Salman. The next stage in 2026 will focus on accelerating economic gains and ensuring the reforms deliver long-term impact, state media reported.
As part of its strategic shift, Riyadh plans to redirect focus away from delayed megaprojects toward areas including logistics, mining, AI, and religious tourism. Finance Minister Mohammed Al Jadaan emphasized that spending priorities are changing, even if total expenditure remains relatively steady.
Specific new targets remain limited, though the government aims to boost Umrah pilgrimage visitors to over 20 million in 2026, up from 15 million expected in 2025.
Total spending is set at 1.31 trillion riyals next year, slightly below this year’s estimate, while revenue is projected to rise to 1.15 trillion riyals.
Jadaan said the government intends to run a “deficit by design” until 2028, using borrowing and sovereign reserves to support continued investment. Public debt is projected to increase to around 1.5 trillion riyals by end-2025 — still modest at about 31.7% of GDP — though analysts warn it remains sensitive to oil price swings.
The finance minister noted that both the government and the Public Investment Fund have reassessed investment timelines, scaling back overly ambitious projects to ensure they remain deliverable and economically viable. Notably, the 2026 budget did not highlight major developments like NEOM or Sindalah, reflecting this recalibration.
Click here for more on Finance and Investing
