Saudi Arabia recorded a pronounced budget deficit in its most recent quarter, driven by a combination of subdued oil revenues and sustained public spending, according to data released by the Ministry of Finance.

The shortfall — the largest quarterly deficit since late 2020 — reflects broader fiscal pressures as the Kingdom continues to invest in economic transformation initiatives while navigating volatile global energy markets.

Economic reports indicate that total government revenues over the period were materially outpaced by spending commitments, resulting in a substantial gap that underscores the challenges of balancing structural reform objectives with fiscal prudence.

Oil revenues, traditionally the backbone of the Saudi public purse, declined both on a year-on-year and sequential basis amid fluctuating crude prices and production adjustments by the Organisation of the Petroleum Exporting Countries and allied producers.

Non-oil revenues provided some resilience but were insufficient to offset the contraction in hydrocarbon income.

Meanwhile, government expenditures rose to support major public projects, social spending and strategic investments aligned with the Saudi Vision 2030 agenda to diversify the economy away from oil dependence.

Analysts note that the widening quarterly deficit follows a broader trend of fiscal recalibration, with Riyadh balancing between short-term revenue pressures and long-term growth strategies.

The government has previously forecast a full-year deficit and outlined measures to manage public finances, including enhanced non-oil revenue measures and careful prioritisation of capital expenditure.

Public debt levels have risen modestly as the authorities finance the shortfall, but remain within internationally manageable bounds given Saudi Arabia’s substantial foreign reserves and sovereign balance sheet strength.

The latest figures are likely to factor into policy discussions ahead, including potential adjustments to spending plans and revenue-enhancing reforms.

As the Kingdom works to expand non-oil sectors and attract global investment, fiscal authorities will remain focussed on ensuring that budget outcomes support continued economic resilience without derailing strategic transformation objectives.

With oil markets still subject to uncertainty, the Kingdom’s approach to fiscal management in the coming quarters will be closely watched by investors and policy observers alike.