KSA Budget 2026

 

KSA Budget 2026 – Executive Summary

 

Prepared for: Finance, Tax, Policy & Strategy Professionals

 

Saudi Arabia’s Fiscal Year 2026 Budget underscores a government entering a new phase of transformation, shifting from rapid capacity expansion toward disciplined execution, operational efficiency, and long-term fiscal resilience. The budget balances the realities of a complex global environment with the Kingdom’s determination to sustain growth, reinforce public services, and accelerate diversification under Vision 2030.

  

1. Fiscal Overview

• Total Revenue: SAR 1,147 billion
• Total Expenditure: SAR 1,313 billion
• Projected Deficit: SAR 165 billion (3.3% of GDP)
• Public Debt: SAR 1,622 billion (32.7% of GDP)

The narrowing of the deficit compared with 2025 reflects stronger non-oil activity, tighter spending controls, and a tapering of major capital commitments as mega-projects move from planning to execution.

  

2. Revenue Performance

Non-Oil Revenue: The Key Growth Driver

Non-oil revenue continues to strengthen, backed by expanding private-sector activity, digital commerce, tourism, and logistics.

• Tax revenue: SAR 412B (up from 393B in 2025)
• Non-tax revenue: SAR 735B (up from 698B in 2025)

Growth in VAT collections, retail spending, and formalization of economic activity supports sustained non-oil revenue expansion.

 

Oil Revenue Outlook

Oil receipts are expected to remain stable but modest due to:

• Lower average oil prices (IMF est. USD ~66/bbl)
• Gradual unwind of OPEC+ cuts
• Production forecast of ~10 mb/d in 2026

The revenue mix continues to shift, reflecting clear progress toward revenue diversification.

  

3. Expenditure Priorities

Total spending decreases slightly to SAR 1,313B, indicating a more targeted allocation strategy.

 

Key Spending Themes

1. People-Centric Services (Education, Health, Social Development)
   These remain top priorities, forming the backbone of social and human-capital development.

 

2. Operational Expenditure Dominance
   OPEX represents ~88% of total spending, driven by:
• Public-sector workforce commitments
• Service delivery expansion
• Logistics, public administration, and regulatory enhancement

 

3. Capital Expenditure Moderation
   CAPEX falls to SAR 162B, reflecting:
• Shift of major project funding to PIF, NDF, and PPPs
• Several giga-projects are progressing beyond early capital-intensive stages
• Increased reliance on private investment for infrastructure build-out

 

Sector-Specific Adjustments

• Municipal Services: Sharp decline due to completion of one-off land compensation and expropriation costs.
• Infrastructure & Transport: Normalizing as airport and logistics megaprojects move toward operationalization.
• Public Administration: Higher spending to strengthen regulatory institutions for a diversified economy.
• Economic Resources: Increased focus on agriculture, water security, industrial diversification, and energy transition.

 

4. Macro-Economic Outlook for 2026

Growth

• Real GDP Growth: 4.6% (among the top in the G20)
• Primary Growth Driver: Non-oil sectors, including tourism, retail, entertainment, logistics, fintech, and manufacturing.

 

Inflation

• Expected to remain contained at ~2%, among the lowest globally, ensuring purchasing power stability.

 

Banking Sector

• Total assets near SAR 5T
• Private sector credit expansion ~9%
• Money supply expected to grow 8%

The financial system remains liquid, stable, and supportive of domestic investment.

 

 

5. Risks & Challenges

Global Risks

• Slowing global growth (IMF forecast: 3.1%)
• Heightened geopolitical tensions
• Rising protectionism and supply-chain fragmentation

These factors may suppress global demand and affect investor sentiment.

 

Oil Market Volatility

Brent crude price fluctuations and changes in global demand remain the biggest source of uncertainty for revenue projections.

 

Domestic Response

Saudi Arabia aims to mitigate risk through:

• Fiscal flexibility and diversification
• Broadened funding sources
• Targeted spending in high-impact sectors
• Strategic debt management with extended maturities

  

6. 2025 in Review: Setting the Stage for 2026

Despite weaker oil revenues in 2025, the Kingdom ended the year with:

• Strong 4.7% non-oil GDP growth
• Elevated private consumption
• Record tourism inflows
• FDI strengthening (SAR 46.5B in H1)
• Increased bank lending and capital market deepening
• Continued progress in giga-projects and infrastructure

The 2025 deficit (SAR 245B) reflected a deliberate expansionary stance to sustain the momentum of transformation.

 

 

7. Vision 2030 Progress Reflected in the Budget

Strategic Achievements (up to 2025)

• Tourism is becoming a global leader
• Sharp growth in the logistics workforce and female participation
• Significant progress in digital government services (Tawakkalna ecosystem)
• Expansion of AI, data, and cybersecurity capabilities
• Enhanced infrastructure quality across airports, roads, and logistics
• Diversification of the industrial and advanced manufacturing base

 

Planned Priorities for 2026

• Accelerate AI adoption and digital economy growth
• Strengthen public-sector efficiency and governance
• Expand the SME sector and industrial productivity
• Continue scaling tourism and entertainment ecosystems
• Enhance national resilience in food, water, and energy security

 

 8. Outlook for 2026 and Beyond

Saudi Arabia enters 2026 with strong strategic positioning:

Strengths

• Resilient fiscal framework
• Low debt-to-GDP relative to G20 peers
• Strong private-sector foundations
• Rising female workforce participation
• Robust financial sector and stable inflation

 

Opportunities

• Continued non-oil expansion
• Large-scale digital and infrastructure transformation
• Growing global investor confidence
• Structural reforms enabling sustained medium-term growth

 

Overall Outlook

The 2026 budget reinforces Saudi Arabia’s transition from rapid build-out to high-performance execution, prioritizing efficiency, diversification, and fiscal sustainability while maintaining momentum on Vision 2030.

 

 

A Brief Comparison: 2025 vs. 2026

Budget Item	2025 (SAR Billion)	2026 (SAR Billion)	Change	Notes
Total Revenue	1,091	1,147	+5.2%	Growth driven by higher non-oil revenue
Non-Oil Revenue	1,091 - Oil Revenue	1,147 - Oil Revenue	Significant increase	Robust expansion in taxes, VAT, and fees
Tax Revenue	393	412	+4.8%	Reflects a broadening tax base and economic activity
Non-Tax Revenue	698	735	+5.3%	Includes fees, royalties, and state-owned enterprises
Oil Revenue	393 (approximate)	412 (approximate)	Stable to slight decrease	Impacted by lower oil prices and production adjustments
Total Expenditure	1,356	1,313	-3.1%	More targeted spending with an operational efficiency focus
Operational Expenditure	~1,200 (approximate)	~1,155 (approximate)	Slight decrease	Driven by workforce and service delivery costs
Capital Expenditure	205	162	-21%	Shifts to PPPs, PIF, and NDF to fund mega projects
Projected Deficit	245	165	-32.7%	Improved fiscal balance reflects stronger revenues and controlled spending
Public Debt	1,560	1,622	+4%	Modest increase, but remains low relative to GDP
GDP Growth (Real)	3.9%	4.6%	+0.7 percentage points	Non-oil sector remains key growth driver

Summary of Changes:

• The 2026 budget shows higher total revenue, primarily due to increased non-oil receipts, reflecting ongoing economic diversification.
• Total expenditure is slightly lower than in 2025, underscoring more efficient, targeted spending.
• Capital expenditure drops significantly as major capital-intensive projects transition to funding via alternative financing mechanisms.
• The projected deficit narrows considerably, signaling improved fiscal discipline and stronger economic fundamentals.
• Public debt grows modestly but remains at manageable levels relative to GDP.
• Real GDP growth accelerates, driven by non-oil sector expansion and strong private sector activity.

 

This comparison highlights Saudi Arabia’s strategic shift toward fiscal sustainability and operational efficiency while maintaining momentum toward Vision 2030 goals.

Budget at a Glance: