Overview of the Budget Deficit#
Saudi Arabia reported a significant budget deficit of 125.7 billion riyals, equivalent to $33.5 billion, for the first quarter of 2026. This financial shortfall was primarily attributed to a substantial increase in government spending, which rose by 20% compared to the same period last year.
Government Spending vs. Revenue#
Total government spending during this quarter amounted to 386.7 billion riyals, surpassing the revenues that totaled 261.0 billion riyals. This indicates that the government spent much more than it earned, leading to the reported deficit.
Changes in Oil and Non-Oil Revenues#
Oil revenues, a crucial part of Saudi Arabia's economy, saw a decline of 3%, dropping to 144.7 billion riyals from 149.8 billion riyals in the first quarter of 2025. In contrast, non-oil revenues experienced a slight increase of 2%, rising to 116.3 billion riyals from 113.8 billion riyals a year earlier. This shift highlights the ongoing challenges in the oil market and the government's efforts to diversify its revenue sources.
Military Spending Increases#
Notably, military spending surged by 26%, reaching 64.7 billion riyals compared to 51.4 billion riyals in the same quarter last year. This increase reflects the government's focus on enhancing its military capabilities amid regional tensions.