Saudi Arabia’s Quarterly Budget Deficit Widens to $23bln on Spending Jump

ABU DHABI/CAIRO: Saudi Arabia's budget deficit widened to 88.5 billion riyals ($23.6 billion) in the third quarter as spending picked up and oil revenue growth was almost flat, finance ministry data showed.

The world's top oil exporter is in the midst of a massive economic transformation spearheaded by Crown Prince Mohammed bin Salman - Vision 2030 - designed to increase non-oil growth and revenue, and reduce hydrocarbon dependence, which requires hundreds of billions in investment.

But lower oil prices and output have weighed on revenue with the kingdom having curbed production over several years in a bid to support the oil market. Some members of the OPEC+ group of oil producers, including Saudi Arabia, began a gradual easing of those curbs in April but concern over an oversupply in the market continues to weigh on prices.

The deficit in the third quarter marked a 160% rise from the 34 billion riyals recorded in the previous quarter, according to Reuters calculations.

Oil revenue dipped 0.1% on a quarterly basis to 150.8 billion riyals in the third quarter, but was down 21% from the same quarter of 2024.

 

SPENDING RISES

Total revenue fell by 13% year-on-year to 269.9 billion riyals in the quarter, of which 119.1 billion riyals was from non-oil industries. On a quarterly basis however, total revenue dipped by 10.3%.

Total spending rose 6% year-on-year to 358.4 billion riyals.

The total fiscal deficit stood at 181.8 billion riyals to the end of September. The kingdom had initially budgeted a full year deficit of 101 billion riyals which the finance ministry revised significantly wider to 245 billion riyals in its 2026 pre-budget statement, equating to 5.3% of GDP.

"The high spending growth in Q3 means that it will be challenging to achieve the full year spending cut envisaged in the mid-year review, and so the 2025 deficit could be even larger than the official forecast of 5.3% of GDP," said Justin Alexander, director at Khalij Economics and Gulf analyst at GlobalSource Partners.

 

GROWTH ACCELERATES

Saudi Arabia's economy grew 5% in the third quarter from a year earlier, government estimates released on Thursday showed, with oil-related growth surging as output ramps up.

The ministry of finance has forecast real GDP growth of 4.4% in 2025, up from 2% last year, driven by the growth of non-oil activities.

The International Monetary Fund raised its forecast for real GDP growth in 2025 to 4% earlier this month on increased oil output.

"Anchoring a fiscal policy in the medium term would allow Saudi to not only be less pro-cyclical but also provide additional comfort to investors," Jihad Azour, director of the IMF's Middle East and Central Asia division told Reuters earlier this month.

The kingdom's public debt stood at 1.47 trillion riyals at the end of the third quarter, the ministry said.