Saudi Arabia is facing a significant fiscal challenge as its budget deficit expanded dramatically in the first quarter of 2026, reaching -$33.5 billion. This marks the largest deficit recorded since 2018 and represents a staggering increase, having more than tripled since the second quarter of 2025.
The widening deficit is attributed to a combination of declining oil revenues and a substantial surge in government spending. Oil revenues saw a year-over-year decrease of 3%, indicating a downturn in income from the Kingdom’s primary export. Concurrently, government expenditure experienced a sharp rise of 20% year-over-year, pushing the total to approximately $103 billion.
This fiscal situation raises concerns about the Kingdom’s economic stability and its reliance on oil income. The significant increase in spending, coupled with falling oil prices, has put a strain on public finances. The trend suggests potential challenges in managing the national budget in the coming quarters. The data highlights the vulnerability of economies heavily dependent on oil exports to fluctuations in global energy markets and the impact of increased public spending.
This information was reported by The Kobeissi Letter on May 6, 2026. According to The Kobeissi Letter.
BREAKING: Saudi Arabia’s budget deficit widened by -$8.2 billion in Q1 2026, to -$33.5 billion, the largest since 2018. Saudi Arabia’s deficit has more than TRIPLED since Q2 2025. This comes as oil revenues fell -3% YoY, while government expenditure surged +20% YoY, to ~$103…. #breaking
— @KobeissiLetter May 1, 2026
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