Saudi Arabia has approved its 2026 state budget, signalling a new phase in the kingdom’s economic transformation as Vision 2030 enters its advanced execution stage. The SAR 1.31 trillion spending plan reflects a strategic shift toward sectors that accelerate diversification, expand non-oil revenue, and enhance the role of the private sector, while maintaining disciplined fiscal management. With projected revenues of SAR 1.14 — 1.15 trillion, the 2026 deficit is forecast at SAR 165 billion, or 3.3 percent of GDP—substantially narrower than the SAR 245 billion deficit now expected for 2025 after lower oil prices and higher-than-planned spending exerted pressure on the fiscal balance.
Crown Prince Mohammed bin Salman emphasized that the state will maintain a firm commitment to efficient spending, transparent program execution, and long-term fiscal sustainability. He stressed that the welfare of Saudi citizens remains the government’s foremost priority, and that the next stage of Vision 2030 will transition from launching reforms to maximizing their impact. Describing this “third phase,” the Crown Prince said it will focus on accelerating progress, opening new growth opportunities, and delivering a sustainable economic legacy beyond 2030. He highlighted that structural reforms over recent years have strengthened non-oil economic growth, stabilized inflation at levels lower than many global peers, enhanced the business environment, and increased private sector contribution to 50.3 percent of real GDP.
The budget reflects several notable shifts compared with 2025. The largest percentage increase appears in the energy sector, where natural gas production capacity is set to rise by 7 percent, supporting industrial expansion and reducing domestic liquid fuel consumption. Tourism is also set for rapid expansion, with spending expected to reach SAR 351 billion in 2026—a rise of roughly 6 percent year-on-year—as the kingdom accelerates efforts to attract long-stay visitors and increase the number of foreign Umrah pilgrims to more than 20 million, compared with an estimated 15 million in 2025. Non-oil revenue and government returns are projected to climb by 5.2 percent to SAR 735 billion, driven by stronger investment income, improved public service revenues, and enhanced economic activity.
Education spending will rise by 1.5 percent to SAR 202 billion, strengthening modernization of curricula and expansion of digital and vocational training platforms. Defense expenditure increases slightly by 0.3 percent to SAR 240 billion. Concurrently, nearly SAR 70 billion will be directed toward the development of 80,000 new housing units and serviced plots in partnership with domestic and international developers, reinforcing efforts to meet rising housing demand and expand homeownership.
Other areas show reductions. Capital expenditure will decline from SAR 172 billion in 2025 to SAR 162 billion in 2026, representing a 5.8 percent decrease, as government agencies shift from large-scale capital commitments to consolidating and completing ongoing projects. Spending on health and social development will fall by 3.5 percent to SAR 259 billion, though the government will still build six new hospitals equipped with 1,100 beds, indicating that earlier capital-intensive phases have concluded and efficiencies are being realized within the sector.
Finance Minister Mohammed Al-Jadaan said the kingdom is shifting its focus from “how much it spends” to “what it spends on,” adding that Saudi Arabia will run a “deficit by design” until 2028. The projected deficit reflects intentional investment in diversification priorities rather than fiscal strain. He noted that spending in 2024 and 2025 exceeded original plans by about 4 percent, while revenues underperformed by nearly 7.8 percent due to lower oil prices and production levels, elevating the 2025 deficit to a revised estimate of 5.3 percent of GDP.
Public debt is expected to rise to approximately SAR 1.5 trillion by the end of 2025, equal to 31.7 percent of GDP, and to nearly SAR 1.622 trillion in 2026—or 32.7 percent of GDP—levels economists say remain manageable but sensitive to oil price volatility. Al-Jadaan said the kingdom’s relatively low debt profile provides space to maintain its strategic fiscal stance even under global economic uncertainty.
A major theme of the 2026 budget is recalibration. Both the government and the Public Investment Fund (PIF), which manages nearly USD 925 billion in assets, have reviewed megaproject timelines and spending priorities. According to officials, projects with overly ambitious schedules or cost structures have been adjusted to more realistic trajectories. Reuters previously reported that the PIF is preparing to shift away from the massive real estate “gigaprojects” that dominated the past decade—such as NEOM and Sindalah—toward sectors including logistics, minerals, artificial intelligence, and religious tourism. The absence of mega project references in the 2026 budget supports the view that Saudi Arabia is transitioning from announcing visionary projects to refining, sequencing, and ensuring their delivery.
Macroeconomic fundamentals remain strong. The Ministry of Finance expects real GDP to grow by 4.6 percent in 2026, supported by 4.8 percent growth in non-oil activities. The Crown Prince affirmed that the PIF will continue serving as the state’s primary investment engine, expanding strategic industries, forging global partnerships, and strengthening the kingdom’s economic resilience.
In summary, the 2026 budget positions Saudi Arabia firmly within the decisive execution phase of Vision 2030. It reflects disciplined spending, targeted sectoral expansion, robust non-oil growth, and an accelerating shift toward an economy where private enterprise, innovation, and diversified revenues underpin long-term national prosperity. With citizens at the centre of policy, a recalibrated investment strategy, and structural reforms now yielding measurable outcomes, the kingdom enters 2026 with renewed confidence in its ability to sustain growth and navigate the challenges of a rapidly changing global economy.
