Saudi Arabia approves 2026 budget with $350bn in spending and deficit of $44bn

Saudi Arabia on Tuesday approved its budget for next year with spending of 1.31 trillion Saudi riyals ($350 billion) and an estimated deficit of ‍165.4 ‍billion riyals (⁠$44 billion), as it continues to fund its economic diversification plan.

The budget forecasts revenue of 1.15 trillion for 2026, an increase of 5.1 per cent on this year, the Ministry of Finance said. Revenue this year is estimated at 1.09 trillion riyals, a decline of around 7.8 per cent compared with previous estimates, mainly due to lower oil prices.

Spending for this year is estimated at 1.336 trillion riyals, an increase of 4 per cent on the approved budget, as a result of "the ongoing efforts to support promising sectors in order to achieve the objectives of Saudi Vision 2030, diversify the economic base, and achieve inclusive growth", the ministry said.

The government remains focused on the implementation of giga-projects and top-priority national strategies in line with the objectives of Saudi Vision 2030, the ministry said. This includes developing infrastructure, improving the quality of life and enhancing public services.

The ministry expects a budget deficit of 245 billion riyals in 2025, accounting for 5.3 per cent of GDP.

The 2026 budget was approved by Crown Prince Mohammed bin Salman, who also directed ministers and officials to commit to "implementing the programmes, strategies, and development and social projects included in the budget, consistent with the goals of the Saudi Vision 2030", the Saudi Press Agency reported.

Real GDP growth is expected to increase to 4.6 per cent in 2026, up from 4.4 per cent this year, supported by a 5 per cent growth in non-oil activities. Inflation is forecast to decline to 2 per cent next year from 2.3 per cent in 2025.

Saudi Arabia’s non-oil private sector business activity expanded at its ⁠fastest rate in 10 months ​in November, driven by higher sales, rapid hiring and increased purchases, according to the seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index released by S&P Global on Wednesday.

While the headline PMI slipped to 58.5 in November, from 60.2 in October, it remained well above the 50 mark that separates growth from contraction, indicating a strong improvement in business conditions, the survey found.

The kingdom is pushing to reform its economy and cut its reliance on the sale of hydrocarbons to generate revenue. Developing non-oil sectors and further boosting foreign direct investment are central planks of the kingdom's Vision 2030 agenda. The reforms span sectors including property, investment, tourism and technology.

From the beginning of this year until the third quarter, GDP grew by 4.1 per cent annually, driven by a 4.7 per cent increase in non-oil activities, the ministry said.

"This is attributed to growing domestic demand, reflected in higher consumption and investment, resulting from expansion across diverse economic sectors," it said.

"It is also due to the impact of continued economic diversification which supported the growth of non-oil activities and enhanced the role of the private sector and its ability to create jobs and attract investment."

The percentage share of non-oil revenue covering total spending in the budget is expected to grow from 17 per cent in 2015 to around 37.5 per cent by the end of this year, the ministry said.

The total public debt balance is expected to reach about 1.45 billion riyals this year, rising to 1.62 billion riyals in 2026.

The kingdom has recorded a rise in foreign direct investment, with net inflows reaching about 46.5 billion riyals in the first half of this year, up more than 29 per cent annually, the ministry said.

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