- The 2026 budget projects a deficit of 165 billion rials.
- Saudi Arabia halfway to Vision 2030 strategy.
- The next phase of the Vision 2030 plan will emphasize implementation.
Saudi Arabia approved its 2026 state budget on Tuesday, forecasting a narrower fiscal deficit as it shifts spending to priority sectors such as industry and logistics in an effort to boost non-oil revenues.
The kingdom projected a deficit of 165 billion rials ($44 billion), or about 3.3% of gross domestic product. That would be less than the 245 billion rials it now estimates for this year after lower oil prices and production weighed on revenues and spending exceeded the budgeted level by about 4%.
The world's top oil exporter, Saudi Arabia, is more than halfway through its Vision 2030 plan for economic transformation. The strategy, introduced by Crown Prince Mohammed bin Salman in 2016, calls for hundreds of billions of dollars in government investment to wean the kingdom's economy from dependence on hydrocarbon revenues.
According to the budget, 2026 will mark the start of a “third phase” of Vision 2030, signaling a shift in focus from launching economic reforms to maximizing their impact.
The crown prince described the new phase as “accelerating the pace of progress and increasing growth opportunities to achieve sustainable impact beyond 2030,” according to state news agency SPA.
A change in spending but few details
The change in tone comes as Riyadh attempts to refocus its $925 billion sovereign wealth fund away from massive delayed real estate projects toward sectors including logistics, minerals, artificial intelligence and religious tourism.
“Our level of spending over the last three budget cycles has been consistent, but now it is about what we spend on, rather than how much we spend,” said Finance Minister Mohammed Al Jadaan. Reuters before the budget is published.
The budget included some specific objectives for that new approach; However, beyond setting a target of more than 20 million foreign visitors for the Umrah pilgrimage to Mecca in 2026, a sharp increase from the 15 million pilgrims expected this year.
Saudi Arabia will have a 'deficit by design' until 2028, says finance minister
Total spending is projected to be 1.31 trillion rials in 2026, lower than the 1.34 trillion rials estimated for this year. Total revenue is forecast to reach 1.15 trillion rials, slightly above the estimated 1.1 trillion rials in 2025.
“This is an intentional deficit,” Jadaan said at a news conference on Monday. “We, by political choice, will have a deficit until (20)28.”
The expected jump in the 2025 deficit to more than double the budgeted target of 101 billion rials would put the deficit at 5.3% of GDP, against an initial target of 2.3%.
This year's revenue is estimated to miss the budgeted target by approximately 7.8%, while spending is projected to be 4% higher.
Public debt is expected to reach about 1.5 trillion rials by the end of 2025 – about 31.7% of GDP – up from 1.2 trillion rials in 2024 to help cover this year's financing needs, the Finance Ministry said.
“The still low level of public debt provides room for this fiscal stance, although it is vulnerable to a further drop in oil prices,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
Recalibrate to ensure projects are delivered
The Saudi government and the country's nearly $1 trillion Public Investment Fund have been subject to a review of project and spending priorities, Jadaan said. Reuters.
Some demands that seemed overly ambitious in terms of timeline or investment were scaled back to more reasonable goals, he said.
Reuters reported in October that the PIF is preparing to move away from the real estate gigaprojects that have dominated its development goals for the past decade.
Unlike this year's spending package, the 2026 budget makes no mention of specific gigaprojects like NEOM or the Sindalah Island resort.
The PIF, like the Ministry of Finance, is ensuring that initial project plans “are recalibrated to ensure that they are delivering what they need to deliver,” Jadaan said.
