The Saudi Fiscal Deficit in 2025 Was Larger Than Expected

The Saudi Ministry of Finance has published updated fiscal numbers for 2025. The new data shows a considerably larger fiscal deficit than previously thought. The 2025 deficit is now pegged at 277 billion riyals ($74 billion; 6% of gross domestic product) compared to an estimate of 245 billion riyals ($65 billion; 5.3% of GDP) at the time of publication of the 2026 budget statement in December 2025. The 2025 deficit was initially estimated at 101 billion riyals ($27 billion; 2.3% of GDP) in the 2025 budget statement.

(Source: Ministry of Finance) Notes: No estimate for oil and non-oil revenue is given in the budget document. G&S is goods and services.

The increase in the estimated size of the 2025 deficit since December reflects much higher spending that more than offset higher oil revenue. The extra spending was almost entirely accounted for by the “goods and services” category. Unfortunately, the specifics of this spending and the reasons it was so substantially underestimated in the previous projections are not available.

Implications for 2026

The 2026 fiscal deficit is budgeted at 165 billion riyals ($44 billion; 3.3% of GDP). The lower deficit relative to 2025 is due to expectations of higher revenue and lower expenditure. The spending overrun in 2025 will make the 2026 target more difficult to achieve – a spending reduction of 5.4% relative to the revised 2025 outcome will now be needed. On revenue, oil prices have risen since the turn of the year with the ratcheting up of tensions between the United States and Iran. Brent crude is currently trading around $72 per barrel. While the government does not declare the oil price it assumes in the budget, it is estimated that the 2026 budget is based on an oil price of around $72/bbl. While considerable uncertainty surrounds the future direction of oil prices, the revenue projections in the budget will look quite reasonable if oil prices are sustained around current levels.

More broadly, the recent upward revision to 2025 expenditure highlights the difficulty the government has in containing spending close to budget levels. The spending overrun in 2025 was 8% and over the past four years it has averaged over 13%. This indicates that there is still considerable scope for strengthening expenditure planning and control systems as fiscal reforms move forward.

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