Saudi Arabia has approved its 2026 state budget, forecasting a fiscal deficit of 165 billion riyals—about 44 billion US dollars—equivalent to roughly 3.3 per cent of gross domestic product.

That represents a substantial narrowing from the 2025 shortfall, which the government estimated at 245 billion riyals, or 5.3 per cent of GDP.

The 2026 budget sets total government expenditure at 1.313 trillion riyals, against projected revenues of 1.147 trillion riyals.

Officials stress the deficit is a deliberate aspect of planned fiscal policy rather than a sign of crisis, part of a broader economic strategy under Vision 2030 to diversify the kingdom’s economy away from oil dependency.

Public spending remains focused on priority sectors including industry, logistics, tourism and technology.

Capital-spending budgets and outlays on goods and services have been trimmed compared with previous years, but investments continue through the Public Investment Fund (PIF) to support infrastructure projects and attract private-sector participation.

Economists note that despite reduced oil revenues, Riyadh expects non-oil growth to bolster overall economic expansion — with non-oil GDP projected to rise in coming years.

The shift in spending reflects a recalibration: the government now emphasises quality and strategic focus over sheer scale.

While the 2026 deficit marks a persistent imbalance, analysts argue the kingdom’s relatively low public-debt ratio and planned structural reforms provide a buffer, allowing continued investment without undermining financial stability.

The budget thus signals a transition to a leaner, more targeted phase of state-led development under Vision 2030.