Saudi 9M 2026 budget deficit overshoots full-year forecast

Borrowing covered the entirety of Saudi Arabia’s 9M 2026 budget shortfall, while the deficit has already run SAR 78.9 bn past the government’s full-year target with a quarter left, the quarterly budget performance report (pdf) shows. The government posted a deficit of SAR 244.3 bn in the first nine months of the year against a full-year forecast of SAR 165.4 bn, while revenues were up 3% y-o-y to SAR 858.9 bn. “This does not necessarily signal a negative structural shift, but it highlights the challenge of balancing volatile revenues against rising spending commitments,” XTB financial analyst Milad Azar tells EnterpriseAM.

Spending, not oil, drove the gap: Oil revenues fell just 1% y-o-y to SAR 446.3 bn, while non-oil revenues increased 8% to SAR 412.5 bn, with taxes on goods and services up 4% to SAR 229.3 bn and other revenues up 22% to SAR 102 bn. Expenditure growth was led by a 197% jump in grants, a 49% rise in subsidies, and a 38% increase in financing expenses, with capital spending up 17% at SAR 137.6 bn and employee compensation close to flat at SAR 435.8 bn.

Public debt reached SAR 1.774 tn, rising 16.8% y-o-y, while domestic debt stood at SAR 1.136 tn and external debt reached SAR 637.6 bn. Government reserves stood at SAR 399.5 bn. “Borrowing is a rational option for preserving government reserves and spreading financing requirements over a longer period, particularly as development investments continue,” Azar says, adding that the approach holds as long as the economy generates returns above borrowing costs.

Spending had reached 84% of the annual expenditure budget by September. Health and social development took the largest share at SAR 230.8 bn, or 89% of its SAR 259.3 bn allocation, ahead of military spending at SAR 187.5 bn, or 78% of SAR 239.8 bn, and education at SAR 159.3 bn, or 79%. Military and education execution running behind reflects different contracting and operational cycles rather than a shift in priority, Azar says, with more of their spending likely to happen in 4Q.

REMEMBER- The preliminary budget statement puts next year’s shortfall at SAR 191 bn, on revenues of SAR 1.2 tn against spending of almost SAR 1.4 tn, followed by SAR 177 bn in 2028 and SAR 192 bn in 2029.