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The budget deficit narrowed to SAR 34.5 bn in 2Q 2025 from SAR 58.7 bn in the previous quarter, according to the Finance Ministry’s quarterly budget performance report (pdf). Government revenues reached SAR 301.6 bn during the quarter, down 15% y-o-y, while expenditures fell 9% y-o-y to SAR 336.1 bn.
For the first half of the year, the deficit totaled SAR 93.2 bn, with revenues reaching SAR 565.2 bn, down 13% compared to the same period last year, while expenditures came in at SAR 658.4 bn, down 2% y-o-y.
ICYMI- Fitch forecasts that the budget deficit will widen to 4.0% of GDP in 2025 and 4.1% in2026, primarily due to lower projected oil prices — as the average Brent crude price is expected to hit USD 70 a barrel this year — and reduced dividends from Saudi Aramco.
The Finance Ministry expected the budget deficit to come in at 2.3% of GDP (SAR 101 bn) in this fiscal year. Officials said the Kingdom is willing to accept (modest) fiscal deficits as the price of pursuing long-term diversification goals, framing it as wanting to avoid “overheating” the national economy.
THE BREAKDOWN-
Oil revenues accounted for around 50% of total government income in 2Q 2025, coming in at SAR 151.7 bn (a drop of c. 29% y-o-y). Meanwhile, non-oil revenues made up the other half, reaching SAR 149.9 bn, up about 7% compared to the same period last year, driven by higher tax collections across the board.
Total expenditures in 2Q 2025 stood at SAR 336.1 bn, down 9% y-o-y. Compensation for government employees remained the single largest spending item at SAR 140.4 bn — roughly 42% of total spending — and was broadly flat compared to the same quarter last year. Spending on goods and services followed at SAR 73.6 bn, down 3% y-o-y.
On a 1H basis: Oil revenues came in at SAR 301.5 bn, down 24% y-o-y, while non-oil revenues rose 5% y-o-y to SAR 263.7 bn. Compensation of employees increased 3% to SAR 286.5 bn, and spending on goods and services reached SAR 138.2 bn, inching up 1% y-o-y.
The debt situation: Total public debt stood at SAR 1.39 tn at the end of the second quarter, with domestic debt amounting to SAR 871.3 bn, while external debt reached SAR 515.1 bn. Debt issuances during the first half of the year included SAR 197.6 bn of domestic debt and SAR 54 bn in external debt.
