- Saudi Budget 2026 Statement: A Comprehensive Brief and Analytical Reading

Executive Summary: Towards Fiscal Sustainability and Structural Growth

The Fiscal Year 2026 Budget reflects the Saudi government's continued implementation of comprehensive structural and fiscal reforms in line with "Saudi Vision 2030", with a strategic focus on diversifying the economic base and enhancing fiscal sustainability. This budget, coming halfway towards achieving the Vision, demonstrates that the Saudi economy enjoys high resilience in the face of global economic and geopolitical challenges, driven by strong and accelerating growth in non-oil activities which have become the main and actual driver of economic growth.

The 2026 budget adopts a calculated expansionary approach, balancing the maintenance of fiscal discipline with continued transformative capital spending on Giga Projects and infrastructure, thereby enhancing the quality of life and services provided to citizens and residents. This statement confirms the Kingdom's success in decoupling the historical correlation between government spending and oil price fluctuations, as the budget has become a tool for enhancing overall economic stability.

Key Financial and Economic Indicators (Overview):

• GDP Growth: Estimates indicate a recovery and acceleration of economic growth, with Real GDP expected to grow by 4.4% in 2025, rising to 4.6% in 2026, supported mainly by the growth of non-oil activities which are expected to grow by 5.0%.
• Revenues: Total revenues for 2026 are estimated at SAR 1,147 billion, an increase of 5.1% over 2025 projections, reflecting improved economic activity and growth in non-oil revenues, which now cover a significant portion of operational expenditures.
• Expenditures: Total expenditures for 2026 are estimated at SAR 1,313 billion, with continued focus on transformative spending to ensure the completion of strategic projects on schedule, and enhancing spending efficiency to maximize economic and social impact.
• Fiscal Deficit: A deficit of 3.3% of GDP is expected in 2026 (about SAR 165 billion). This is considered a deliberate and planned "investment deficit" to support economic growth, not a forced operational deficit, as it is directed towards financing projects with long-term economic returns.
• Public Debt: Public debt stock is estimated to reach SAR 1,622 billion in 2026 (equivalent to 32.7% of GDP), a very safe ratio compared to global rates and IMF recommendations, used to finance development needs and diversify funding sources.
• Reserves: The government continues to maintain a stable and reassuring level of government reserves at the Saudi Central Bank at SAR 390 billion as a safety valve against external shocks and global market fluctuations.
• Labor Market: Achieving a historic drop in unemployment rates among Saudis to 6.8%, with a notable increase in women's participation in the workforce to 34.5%, reflecting the success of Saudization policies, women's empowerment, and job creation in the private sector.

Section 1: Economic Developments and Outlook

1.1 Global Economy: Slowdown with Uncertainty and Risks

Global economic performance in the current period is characterized by relative slowdown and uncertainty, amidst rising geopolitical tensions in several regions, and increasing protectionist trade policies that may hinder international trade.

• Growth Forecasts: The IMF and other international organizations indicate a slowdown in global growth from 3.3% in 2024 to 3.2% in 2025, continuing to 3.1% in 2026. This slowdown places pressure on global demand for energy and commodities, necessitating flexible economic policies from exporting countries.
• Global Inflation: Inflation is on a gradual downward path, expected to fall from 5.8% in 2024 to 3.7% in 2026, prompting major central banks (such as the US Federal Reserve and ECB) to adopt less aggressive monetary policies and start an interest rate cut cycle, which may ease financing costs globally.
• Global Risks: Key risks include record high global debt levels exceeding global GDP, trade restrictions, and reciprocal tariffs that deepen uncertainty and affect global supply chains.

1.2 Domestic Economy: Resilience and Non-Oil Leadership

In contrast, the Saudi economy showed exceptional resilience and gradual decoupling from the global slowdown path, with non-oil activities achieving historic performance levels, confirming the success of the economic diversification strategy.

• Non-Oil Growth: These activities recorded 4.7% growth up to Q3 2025, expected to reach 5.0% by year-end. This growth is the true fruit of economic diversification programs and massive investments in new sectors such as tourism, entertainment, industry, and logistics.
• Purchasing Managers' Index (PMI): The Kingdom recorded 60.2 points in October 2025, one of the highest levels globally, reflecting the expansion of the non-oil private sector for consecutive years above the neutral level (50 points) with strong momentum, driven by increased domestic demand and new export orders.
• Consumption and Investment: Private investment contributed 2.5% to GDP growth in Q1 2025, while e-commerce sales grew by an astounding 64.3% up to August 2025, indicating a deep digital transformation in consumer behavior and the business sector, and increased consumer confidence.

1.3 Oil Markets and Supplies

• Production: Total Kingdom oil production reached about 10.0 million barrels per day in September 2025, with supplies expected to reach 10.1 million barrels in November 2025 according to the "OPEC+" gradual and cautious plan to phase out voluntary cuts, ensuring market balance and price stability serving both producers and consumers.
• Prices: Average Brent crude price was $69.9 per barrel for the first nine months of 2025, a decrease of 14.5% from the previous year due to global fluctuations and weak demand in some major markets. Despite this drop, the Saudi budget was able to absorb the impact thanks to non-oil revenue growth.

Section 2: Fiscal Performance and Estimates

2.1 2025 Budget (Updated Projections)

Before diving into 2026 details, it is important to review the expected performance for 2025, where figures reflect resilience in dealing with variables:

• Revenues: Expected to reach SAR 1,091 billion (7.8% decrease from original budget estimate, mainly attributed to lower oil prices and voluntary production adjustments).
• Expenditures: Expected to reach SAR 1,336 billion (4.0% increase over approved budget, to support accelerating major projects, improving service quality, and covering some emergency expenses).
• Deficit: Expected to record a deficit around SAR 245 billion (equivalent to 5.3% of GDP), an acceptable and controlled level given the massive investment spending.

2.2 2026 Budget and Medium Term

In 2026, the government targets a flexible budget that supports economic growth while maintaining fiscal discipline, preparing for any potential economic scenarios.

Medium-Term Financial Indicators Table (SAR Billion):

2.3 Revenue Analysis in 2026

• Taxes (SAR 412 billion): Expected to grow by 4.9% driven by improved economic activity, consumption, and tax collection efficiency.
  • Taxes on Goods and Services: Estimated at SAR 314 billion (5.5% increase), reflecting strong domestic demand.
  • Taxes on Income and Profits: Estimated at SAR 33 billion, with corporate and private sector profit growth.
  • Customs Duties: Estimated at SAR 28 billion, supported by trade movement and imports to meet project requirements.
• Other Revenues (SAR 735 billion): Includes oil revenues and profit dividends from government investments (such as PIF investments), with an expected 5.2% increase over 2025, confirming the success of the government income diversification strategy.

2.4 Expenditure Analysis in 2026

• Compensation of Employees: SAR 584 billion (slight 2.3% increase covering normal annual increments and employment in vital sectors like health and education).
• Capital Expenditures: SAR 162 billion (representing 12% of total spending, focusing on completing implementation phases in strategic projects, infrastructure, and public utilities).
• Financing Expenses: SAR 64 billion (21.1% increase due to higher public debt portfolio volume and previously higher global interest rates, reflecting debt service cost which remains within safe limits).
• Social Benefits and Subsidies: SAR 129 billion to ensure support reaches beneficiaries, protect lower-income groups from economic reform effects, and enhance the social safety net.

Section 3: Sectoral Expenditures (Detailed 2026 Targets)

3.1 Health and Social Development (SAR 259 billion)

The largest sector by allocation, reflecting the "Human First" priority in Vision 2030 and interest in community health and well-being.

• Key Achievements (2025): Accreditation of Jeddah and Madinah as largest million-plus healthy cities in the Middle East, and expanding "Seha Virtual Hospital" to link 232 hospitals with 71 precise sub-specialties, providing advanced remote health services.
• 2026 Targets:
  • Establishing 6 new hospitals with total capacity of 1,100 beds in regions (Hail, Khamis Mushait, Al-Leith, Anak, Al-Jumum, Unaizah) to increase capacity and improve geographic coverage.
  • Training 2 million trainees on first aid to enhance community health awareness and build a vibrant society.
  • Launching the Saudi Media Award and a pioneering AI media lab to enhance local and cultural content.

3.2 Education (SAR 202 billion)

Investment in education continues as a fundamental pillar for building human capital and qualifying national cadres for the future labor market.

• Key Achievements (2025): Launching unified "Qabul" platform to facilitate university admission, Kingdom students achieving over 400 global awards in international science olympiads, and sending 1,080 students to top 30 global universities under the Custodian of the Two Holy Mosques Scholarship Program.
• 2026 Targets:
  • Qualitative expansion in teaching Chinese Language to include 85,916 male and female students, enhancing cultural and economic exchange with China.
  • Establishing 16 specialized schools for gifted students in 6 administrative regions to nurture geniuses and provide a stimulating environment for creativity and innovation.
  • Enabling scholarship students to study in more than one major (Double Major) to raise professional efficiency, job flexibility, and meet changing labor market needs.

3.3 Infrastructure and Transport (SAR 35 billion)

This sector focuses on enhancing infrastructure, logistics, and digital capabilities to enable other economic sectors.

• Key Achievements (2025): Telecom and tech market volume reaching SAR 190 billion, and achieving 1st place globally in the ICT Development Index (ITU), reflecting digital infrastructure evolution.
• 2026 Targets:
  • Launching new and advanced terminals at Jouf, Jazan, and Qassim airports to increase capacity and improve traveler experience.
  • Raising tech market volume to SAR 199 billion and adding two new "Unicorn" companies, boosting the digital economy and innovation.
  • Activating strategic logistics centers in Al-Qunfudhah and Yanbu to serve international trade, leveraging the Kingdom's geographic location as a global logistics hub.

3.4 Municipal Services (SAR 72 billion)

Aims to improve quality of life in Saudi cities, develop urban infrastructure, and provide adequate housing.

• Key Achievements (2025): Serving 90,000 families in housing support programs, injecting 107,000 new housing units into the market, and developing 2.5 million square meters of parks and green spaces.
• 2026 Targets: Continuing to improve urban landscape, addressing visual pollution, developing city infrastructure, and increasing green spaces and parks under the "Green Saudi" initiative.

3.5 Human Resources, Sports, and Culture

• Employment: Enabling 2.5 million Saudis in the private sector, reflecting the success of qualitative Saudization policies and partnership with the private sector in creating job opportunities.
• Sports: Hosting 15 global events in 2025, with plans for 13 major events in 2026, and completing the development of King Fahd International Stadium with 70,000 capacity in preparation for international milestones like Asian Cup and World Cup.
• Culture: Opening Marangoni Fashion Institute to boost the local fashion sector, and registering intellectual property rights for Arabic and Saudi Calligraphy internationally to protect cultural heritage.

Section 4: Financial Sector, Capital Market, and Major Projects

4.1 Banking Sector and Capital Market

The financial sector enjoys high resilience enabling it to support economic growth and finance projects.

• Assets: Bank assets exceeded SAR 4.9 trillion by end of September 2025 (13% growth), confirming sector solvency and ability to finance development.
• Credit: Bank credit grew by 14% to reach SAR 3.2 trillion, with high and healthy concentration in real estate, commercial, and industrial activities.
• Capital Market (Tadawul): Institutional investor trading exceeded 50.1% of total market, reflecting market maturity and depth, and foreign ownership rose to 12.2% of free float, reflecting increasing international confidence in the Saudi economy and capital market.

4.2 Public Investment Fund (PIF) and Major Projects

The Fund plays the role of the main investment engine and enabler for new sectors:

• Launching "Riyadh Expo 2030" company to manage and implement the upcoming global exhibition expected to attract millions of visitors.
• Strategic tech partnerships, such as the agreement with "Elm" for digital transformation, and investment in "Humane" for AI to localize advanced technologies.
• Accelerating work and operation pace in major entertainment and tourism projects, especially in "Qiddiya" project which will become a global entertainment, sports, and cultural destination.

Section 5: Financial Risk Management and Sustainability

The government adopted a proactive and prudent approach to financial risk management to ensure long-term fiscal sustainability:

• Challenges: Volatility in energy markets and global demand, global inflationary pressures that may affect import and project costs, and geopolitical supply chain disruptions.
• Handling Mechanisms:
  • Counter-Cyclical Fiscal Policy: Maintaining stable spending levels supporting economic growth even during periods of declining oil revenues, to avoid negative effects of economic fluctuations.
  • Strong Reserves: Maintaining SAR 390 billion at the Central Bank as a first line of defense and strategic reserve to deal with any financial emergencies.
  • Diversifying Funding Sources: Balancing between domestic and international debt issuances to finance deficit and repay principal, seizing market opportunities to lower funding costs and extend debt maturities.
  • Developing Risk Management Framework: Continuous work on analyzing different financial and economic scenarios and setting appropriate contingency plans.

Conclusion: A Vision Beyond Numbers, Creating the Future

The 2026 Budget confirms without a doubt that Saudi Arabia is moving forward steadily in the third phase of "Vision 2030", the phase of "Intensified Implementation and Accelerated Achievement". The figures in this statement are not just financial statistics, but a practical translation of a nation's ambitions to build a prosperous future.

Through a careful balance between ambitious strategic spending and responsible fiscal discipline, the Kingdom continues to build a diversified, resilient, and sustainable economy, gradually reducing dependence on oil and maximizing the role of the private sector and national talents. Focusing on quality of life, developing health and educational services, and enhancing digital and logistics infrastructure ensures a promising future and high quality of life for all citizens and residents, and consolidates the Kingdom's position as a leading global economic and logistics hub.