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Economy May 5, 2026 09:54 AM

Saudi Arabia posts 125.7 billion riyal deficit in Q1 as spending surges

A 20% rise in public outlays and higher military expenditure outweigh modest revenue gains, pushing the first-quarter shortfall to 125.7 billion riyals ($33.5 billion)

By Nina Shah
Saudi Arabia posts 125.7 billion riyal deficit in Q1 as spending surges

Saudi Arabia recorded a budget deficit of 125.7 billion riyals ($33.5 billion) in the first quarter of 2026, the finance ministry said Tuesday. The gap was driven by a 20% increase in government spending to 386.7 billion riyals while total revenues slipped to 261.0 billion riyals. Oil receipts fell 3% year-on-year to 144.7 billion riyals as non-oil revenues rose 2% to 116.3 billion riyals. Military outlays increased 26% to 64.7 billion riyals versus the same period a year earlier.

Key Points

  • Q1 2026 budget deficit was 125.7 billion riyals ($33.5 billion) following a 20% rise in government spending.
  • Total spending reached 386.7 billion riyals while revenues were 261.0 billion riyals; oil receipts fell 3% to 144.7 billion riyals and non-oil revenues rose 2% to 116.3 billion riyals.
  • Military expenditure increased 26% to 64.7 billion riyals versus 51.4 billion riyals in Q1 2025.

Overview

The finance ministry reported on Tuesday that Saudi Arabia ran a budget deficit of 125.7 billion riyals, equivalent to $33.5 billion, in the first quarter of 2026. The ministry attributed the shortfall primarily to a 20% jump in government spending while total revenues declined slightly compared with the same period last year.

Fiscal figures

Total government spending reached 386.7 billion riyals in the quarter, outpacing receipts of 261.0 billion riyals, according to state television. The composition of revenues showed a small shift between oil and non-oil sources.

Revenue breakdown

Oil revenues fell 3% to 144.7 billion riyals from 149.8 billion riyals in the first quarter of 2025, state media reported. Non-oil revenues rose 2% to 116.3 billion riyals from 113.8 billion riyals in the year-earlier quarter.

Spending details

Military spending saw a marked increase, rising 26% to 64.7 billion riyals compared with 51.4 billion riyals in the first quarter of 2025, the finance ministry said. Overall, the 20% increase in government outlays was the dominant factor behind the deficit.

Key takeaways

  • The first-quarter deficit stood at 125.7 billion riyals ($33.5 billion), driven by higher spending and slightly lower revenues.
  • Government spending climbed to 386.7 billion riyals, while total revenues were 261.0 billion riyals.
  • Oil receipts declined 3% to 144.7 billion riyals, and non-oil revenues increased 2% to 116.3 billion riyals; military expenditure rose 26% to 64.7 billion riyals.

Risks and uncertainties

  • The combination of a substantial rise in spending and a slight fall in total revenues contributed directly to the larger budget shortfall.
  • A 3% reduction in oil revenues reduced fiscal receipts compared with the year-earlier quarter, creating pressure on the revenue side.
  • Significant growth in military spending - up 26% year-on-year - added to overall outlays and is a material component of the spending increase.

Sectors affected

The reported figures touch multiple areas of the economy: public finances and fiscal policy, energy-related government receipts tied to oil revenues, and defense spending. Financial markets and policymakers monitoring liquidity and fiscal balance may also take note of the shift in spending and revenue dynamics.

Data cited in this report were provided by the finance ministry and released via state television and state media.

Risks

  • A sharp increase in government outlays combined with slightly lower overall revenues directly contributed to the larger budget deficit, increasing fiscal strain.
  • A 3% decline in oil revenues reduced government receipts compared with the prior-year quarter, creating potential pressure on revenue-dependent budgeting.
  • Rising military spending - up 26% year-on-year - materially added to total outlays and the fiscal gap.

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