Saudi Arabia posts $9.12bn deficit in Q2
Saudi Arabia recorded a budget deficit of SR34.3 billion ($9.14 billion) in the second quarter of 2026, bringing the Kingdom’s total deficit for the first half of the year to SR160 billion, according to the Ministry of Finance.
Intelligence analysis by Llama
Saudi Arabia's second-quarter deficit was significantly lower than the SR125.7 billion shortfall recorded in the first three months of the year, as government revenues increased while spending remained high. Oil revenues contributed SR185.1 billion to government income, while non-oil revenues reached SR153.7 billion during the quarter.
Imagine a country with a lot of oil, but it's not selling as much as it used to. This means the country has to borrow money to pay for things like employee salaries and infrastructure projects. It's like a big family trying to make ends meet, but with a lot of money at stake.
Analysis
A $60B Vote of Confidence
Saudi Arabia's economy is expected to remain resilient despite geopolitical challenges, according to the International Monetary Fund (IMF). The IMF projected economic growth of 1.7% this year, followed by stronger growth of 5.5% in 2027. The IMF noted that conflicts in the Middle East and disruptions to shipping through the Strait of Hormuz have affected economic activity, trade, oil exports, and investor confidence. However, it said Saudi Arabia's economy remains strong due to its solid financial position and diversified oil and logistics sectors.
Why Cursor?
The Ministry of Finance report showed that employee salaries remained the largest government expense, reaching SR144.3 billion in the second quarter, an increase of 3% compared with the same period last year. Spending on goods and services rose 1% to SR74.28 billion, while financing costs increased 41% to SR16.8 billion. Government spending on subsidies increased 73% to SR13.2 billion, while grants jumped 199% to SR1.24 billion. Social benefits rose 8% to SR42.5 billion, other expenses increased 49% to SR34.4 billion, and spending on nonfinancial assets grew 16% to SR46.2 billion.
The Road Ahead
The latest figures come as Saudi Arabia continues to invest heavily in major development and economic diversification projects while managing the impact of changes in global oil markets. The government borrowed SR125.7 billion in the first quarter and SR34.3 billion in the second quarter. Spending on infrastructure and transportation projects increased 21% in the first half of 2026 compared with the same period last year. Expenditure on health and social development also rose 10%.
Key points
- Saudi Arabia recorded a budget deficit of SR34.3 billion ($9.14 billion) in the second quarter of 2026.
- The Kingdom's total deficit for the first half of the year is SR160 billion.
- Government revenues rose 12% year over year to SR338.8 billion in the second quarter.
- Total spending increased 11% to SR373 billion in the second quarter.
- Oil revenues contributed SR185.1 billion to government income, while non-oil revenues reached SR153.7 billion during the quarter.
If Saudi Arabia can manage to increase its oil revenues and reduce its spending, it could potentially reduce its deficit and become more financially stable. This would be a positive development for the country and the region.
However, if the global oil market continues to be affected by conflicts and disruptions, Saudi Arabia's economy could suffer further. This would lead to a higher deficit and potentially even more borrowing, which could have negative consequences for the country and the region.
