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Saudi Arabia sets expansionary budget for 2026

1 October 2025

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Saudi Arabia’s Ministry of Finance has released its Pre-Budget Statement for the fiscal year 2026. It projects total expenditure at SR1.313tn ($349bn) in 2026 against revenues of SR1.147tn, resulting in a deficit of about SR166bn, which is about 3.3% of GDP.

The government stated that spending will continue to be expansionary and counter-cyclical, targeting national priorities with both social and economic impacts. It will also sustain economic growth and advance Vision 2030 reforms.

Medium-term projections indicate a steady increase in public finances. Revenues are expected to grow from SR1.147tn in 2026 to SR1.294tn in 2028, while expenditures are forecast to increase from SR1.313tn to SR1.419tn over the same period.

The ministry noted that accelerated programme implementation has improved financial flexibility and strengthened the kingdom’s ability to respond to economic developments.

Debt levels

Despite the projected deficit, the statement emphasised that debt levels remain within safe limits, supported by financial reserves. The government will continue to draw on multiple funding channels, including local and international bond and sukuk issuances, loans, and alternative mechanisms such as project finance and support from export credit agencies.

The ministry forecast real GDP growth of 4.6% in 2026, underpinned by gains in non-oil activities. For 2025, GDP is estimated to expand by 4.4%, with non-oil sectors expected to record 5% growth, driven by stronger domestic demand and improving labour market conditions. The unemployment rate among Saudi nationals decreased to 6.8% in the second quarter of 2025, marking a record low.

Finance Minister Mohammed Aljadaan said the 2026 budget aims to “consolidate the strength of the kingdom’s financial position, and ensure the sustainability of public finances, in parallel with supporting economic growth.” He added that priorities will continue to focus on development and social programmes, while ongoing structural reforms enhance financial and economic efficiency.

Aljadaan noted that the ratio of public debt to GDP remains low compared to other major economies, giving fiscal policy flexibility to respond to external shocks and emergency needs. He also highlighted the government’s efforts to strike a balance between the requirements of growth and sustainability.

“In light of the continued global uncertainty during 2026 and over the medium term, as a result of the possibility of continued geopolitical tensions and increasing preventive policies, the government continues to monitor and analyse these risks, as a key element in enhancing the efficiency of financial planning,” Aljadaan said.

MEED’s October 2025 special report on Saudi Arabia includes:

> COMMENT: Riyadh strives for sustainable growth
> GOVERNMENT: Riyadh confronts rising regional chaos
> ECONOMY: Riyadh looks to adjust investment approach
> BANKING: New funding sources solve Saudi liquidity challenge
> OIL & GAS: Aramco turns attention to strategic projects
> GAS: Saudi Arabia and Kuwait accelerate Dorra gas field development
> POWER: Saudi Arabia accelerates power transformation
> WATER: Transmission projects drive Saudi water sector growth
> CONSTRUCTION: Saudi construction pivots from gigaprojects to events
> TRANSPORT: Infrastructure takes centre stage in Saudi strategy

To see previous issues of MEED Business Review, please click here

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