Saudi Arabia balances growth and fiscal discipline

Amid heightened regional tensions and uncertainty in the global and regional economies, particularly in the energy sector, Saudi Arabia’s second quarter 2026 budget performance underscores the resilience of the Kingdom’s public finances and the effectiveness of its prudent fiscal management.

Despite external headwinds, the results demonstrate the government’s ability to balance economic stability with long-term development priorities. The second quarter budget also highlights the flexibility of the Kingdom’s fiscal framework in responding to changing economic conditions while maintaining a focus on medium- and long-term sustainability.

Total revenues reached approximately SR338.8 billion ($90.3 billion) in the second quarter, up 12 percent from SR301.6 billion in the same period of 2025. Government expenditure rose 11 percent to SR373.1 billion, from SR336.1 billion a year earlier, reflecting continued investment in strategic national programs and projects supporting economic diversification and sustainable growth.

As spending exceeded revenues, the budget recorded a deficit of SR34.3 billion. The deficit remains consistent with the government’s fiscal plans, while public debt remains sustainable and within the Kingdom’s economic capacity.

Revenue growth was supported primarily by higher oil receipts. Oil revenues rose 22 percent to approximately SR185.1 billion, from SR151.7 billion in the second quarter of 2025, reflecting improved oil market conditions and higher export revenues.

Non-oil revenues also remained resilient, increasing 3 percent to approximately SR153.7 billion from SR149.9 billion a year earlier. The continued expansion reflects the growing contribution of non-oil economic activity and the progress of economic diversification initiatives.

Overall, the second quarter budget results demonstrate Saudi Arabia’s ability to sustain strategic investment while managing fiscal pressures.

Talat Zaki Hafiz

The government also maintained its focus on social protection and quality of life. Spending on social benefits increased 8 percent to more than SR42.5 billion in the second quarter, compared with SR39.2 billion in the corresponding period of 2025. 

The increase reflects the continued importance of social support programs within the Kingdom’s development agenda.

At the same time, the government continued to support private sector-led growth through measures aimed at strengthening trade and logistics. These included streamlining transit shipment procedures, temporarily deferring certain shipping-related penalties and improving coordination among relevant authorities to facilitate the movement of goods and maintain supply chain continuity.

The expanding role of the private sector was also evident in the growth of micro, small and medium-sized enterprises. Their number rose 13.8 percent year on year to 1.811 million establishments in the first quarter of 2026, reflecting the impact of structural reforms aimed at broadening the production base, encouraging entrepreneurship and creating employment opportunities.

The labor market likewise continued to strengthen. The number of Saudi nationals employed in the private sector increased by approximately 172,200 in the first quarter of 2026, a 7.1 percent year-on-year rise, taking total Saudi private sector employment to 2.6 million.

The gains contributed to a further decline in the unemployment rate among Saudis to a historic low of 6.4 percent, from 7.2 percent in the fourth quarter of 2025. The overall unemployment rate also fell to 3.1 percent, underscoring continued progress in labor market reforms and private sector expansion.

Overall, the second quarter budget results demonstrate Saudi Arabia’s ability to sustain strategic investment while managing fiscal pressures. Continued progress in economic diversification, human capital development and private sector growth is strengthening the foundations for long-term expansion while supporting the sustainability of public finances.

• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz