Standfirst: Saudi Arabia ran up a SR244.3 billion budget deficit in the first nine months of 2026, already about SR79 billion more than the shortfall planned for the whole year, after oil income slumped in the third quarter, according to Finance Ministry data.
A third quarter shaped by weaker oil receipts
The kingdom posted a deficit of SR84.3 billion ($22.4 billion) for July to September, the Ministry of Finance said in its quarterly budget performance report, figures carried by Reuters and Arab News. Revenue reached SR259.1 billion while spending stood at SR343.4 billion.
Oil revenue fell 23 percent year on year to SR116.5 billion, down from SR150.8 billion a year earlier. Non-oil revenue moved the other way, rising 20 percent to SR142.6 billion. The quarterly gap was well over double the SR34 billion recorded in the second quarter, according to an analysis by Tim Callen, a visiting fellow at the Arab Gulf States Institute in Washington and a former IMF mission chief for Saudi Arabia.
Callen said oil income was at its lowest since the first quarter of 2021. He pointed to two factors in Saudi Aramco’s accounts: royalty payments dropped as the average price realised by the state oil company eased to $95 a barrel from $108 in the second quarter, and a large settlement owed by the government to Aramco was offset against its tax bill. As a result, Aramco paid only SR2.8 billion in income tax in the quarter, against SR51 billion three months earlier.
Nine-month tally already above the annual plan
Over the first nine months, revenue rose 3 percent to SR858.9 billion while spending grew 8 percent to about SR1.10 trillion. The 2026 budget had projected a full-year deficit of SR165.4 billion, on revenue of SR1.147 trillion and spending of SR1.313 trillion. The cumulative shortfall is therefore close to 50 percent above the original annual target.
Several cost lines rose sharply. Financing expenses climbed 38 percent to SR54.8 billion, subsidies were up 49 percent at SR41.7 billion and capital expenditure rose 17 percent to SR137.6 billion. Employee compensation stayed the biggest item at SR435.8 billion. Health and social development took the largest share of sector spending at SR230.8 billion, ahead of the military at SR187.5 billion and education at SR159.3 billion.
The fourth quarter is usually the costliest
Callen expects oil revenue to rebound strongly in the final quarter if the Aramco settlement proves to be a one-off. But he noted that government spending typically peaks at the end of the year, and estimated the 2026 deficit could approach SR300 billion ($80 billion), or around 6 percent of gross domestic product.
The pressure comes as the regional war disrupts Gulf energy flows. Reuters noted that the conflict has hampered shipments from the Gulf and that Yemen’s Houthis have fired missiles and drones at the kingdom in recent weeks. In its pre-budget statement in September, the ministry estimated that real GDP would contract by 3.6 percent this year, driven by a projected 21.8 percent fall in oil activity, while non-oil activity was expected to grow 3.2 percent.
Borrowing and business sentiment
Riyadh has said it will keep borrowing in domestic and international markets, through bonds, sukuk and loans, as well as project finance and export credit agencies. The same September statement forecast a 2027 deficit of SR191 billion, or 3.6 percent of GDP.
Private-sector sentiment has so far held up. The Business Confidence Index compiled by the General Authority for Statistics stood at 55.5 in October, down 1.1 points on the month but still above the 50 mark that separates optimism from pessimism, Arab News reported on November 9. The Riyad Bank purchasing managers’ index read 54 in October, signalling continued expansion in non-oil activity.
Callen argued that using fiscal space to support the economy during the conflict has been appropriate, but said spending will need to be reined in once it ends. Debt servicing now absorbs about 5 percent of government spending, up from 3.2 percent two years ago, he noted.