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ºÚÁÏÉçÇø’s Ministry of Finance has released the Kingdom’s preliminary 2026 budget statement, projecting total expenditures of SR1.313 trillion ($350 billion) and revenues of SR1.147 trillion. 

This results in an estimated fiscal deficit of around SR166 billion, or roughly 3.3 percent of gross domestic product.

Despite the projected deficit, the government continues to follow a counter-cyclical fiscal strategy — one that emphasizes maintaining spending during periods of global uncertainty to sustain economic growth and social development. This approach reflects the Kingdom’s firm commitment to advancing the objectives of Vision 2030, even amid global headwinds such as trade tensions, tariff-related disputes, and geopolitical instability.

By adopting this strategy, ºÚÁÏÉçÇø is able to channel its fiscal resources into programs and projects with the greatest long-term economic and social returns. This ensures progress toward diversification and development goals while cushioning the economy from external shocks and cyclical slowdowns.

The expansionary nature of the 2026 budget highlights the government’s continued focus on infrastructure, social services, and non-oil sector growth. It underscores a proactive approach to fiscal management — one that sustains investment momentum even when global conditions turn uncertain.

Supporting this stance is the forecast for strong economic performance in 2026, with GDP expected to grow by around 4.6 percent. The fiscal deficit is projected to widen slightly compared to the 2.9 percent estimated for 2025, reflecting sustained public investment and the government’s determination to maintain economic momentum.

The Saudi economy has shown remarkable flexibility and resilience in recent years, particularly in managing public finances and adapting to external shocks. This adaptability has allowed the Kingdom to maintain financial stability and pursue reforms with confidence.

In its 2025 Article IV Consultation, the IMF executive board commended ºÚÁÏÉçÇø’s ability to withstand global volatility, noting robust non-oil sector expansion, contained inflation, and record-low unemployment. Despite declining commodity prices and ongoing uncertainty, the Fund observed that the Kingdom’s outlook remains strong, though global risks persist.

By pursuing a counter-cyclical fiscal policy, ºÚÁÏÉçÇø is positioning itself to manage fluctuations in oil prices and external demand while sustaining long-term stability. This policy framework acts as an economic buffer, enabling the government to respond effectively to global downturns and safeguard national priorities.

Such an approach reinforces macroeconomic stability, preserves growth momentum during challenging periods, and supports ongoing investment in strategic projects that align with Vision 2030. It also promotes economic diversification, resilience, and job creation — all essential for building a sustainable, post-oil economy.

Moreover, the policy helps stabilize growth by stimulating demand during downturns and preventing overheating during periods of rapid expansion. It sustains employment, protects social welfare, and bolsters investor confidence at times when uncertainty could otherwise hinder private sector activity.

A counter-cyclical stance also complements the government’s broader effort to empower the private sector as the primary driver of growth. By ensuring a predictable, supportive fiscal environment, it fosters competition and enhances the overall business climate.

Crucially, this strategy reflects the Kingdom’s ongoing commitment to place citizens’ welfare at the center of its fiscal priorities. The government continues to emphasize that expenditure reviews will not compromise the quality of essential services. On the contrary, investments in public services and quality of life remain core to the national transformation agenda.

By maintaining spending efficiency and focusing on balanced development across all regions and sectors, the government is ensuring that Vision 2030 initiatives progress as planned.

Ultimately, ºÚÁÏÉçÇø’s counter-cyclical fiscal policy provides the flexibility needed to adapt to changing global conditions, accelerate strategic programs, and preserve financial stability. It strengthens the Kingdom’s ability to navigate economic uncertainty while advancing sustainable development and long-term prosperity.

• Talat Zaki Hafiz is an economist and financial analyst.