Saudi Arabia has adopted its 2026 state budget, forecasting a deficit of 165 billion riyals — approximately forty-four billion US dollars — equivalent to about 3.3 percent of gross domestic product.

The fiscal gap, down from a projected 245 billion riyals deficit for 2025, reflects a deliberate recalibration as Riyadh moves to re-orient public spending.

Total government revenue is expected to reach 1.15 trillion riyals, while expenditure is set at 1.31 trillion riyals.

Finance officials describe the deficit as “by design,” part of a broader strategy to sustain investment in key sectors while trimming less-critical outlays.

The 2026 plan signals the start of what Riyadh calls the “third phase” of its long-term economic transformation under Vision 2030. Rather than launching new megaprojects, the government is shifting focus toward industrial development, logistics, tourism, technology, and other non-oil sectors — aiming to deepen private-sector participation and reduce dependence on volatile oil revenues.

Though overall expenditure remains high, planned cuts to capital investment and procurement spending help contain the deficit.

At the same time, state-backed investment through the Public Investment Fund (PIF) will remain active, channelled toward strategic sectors expected to generate sustainable returns.

Economic forecasts accompanying the budget project non-oil GDP to grow strongly, with overall real GDP expansion of 4.6 percent in 2026. Officials say the strategy balances fiscal discipline with growth-oriented investments, maintaining momentum toward a diversified economic base.

Despite the headline deficit, government leaders argue that prudent borrowing levels and robust foreign reserves provide a solid financial buffer.

The 2026 budget underscores Riyadh’s conviction that targeted deficits are a necessary mechanism to transition to a modern, diversified economy while safeguarding long-term fiscal stability.