Saudi Arabia Plans Deficits Until 2029 as Borrowing Costs Rise

Saudi Arabia plans to record a budget deficit every year until 2029, as the pre-budget statement estimated the 2027 deficit at around 191 billion riyals, 177 billion riyals in 2028, and 192 billion riyals in 2029, with revenues approaching 1.2 trillion riyals and expenditures near 1.4 trillion riyals in 2027, according to the "EnterpriseAM" platform.

The Kingdom intends to finance these deficits through a combination of bonds, sukuk, and loans in domestic and international markets, alongside alternative financing instruments for infrastructure projects. Figures indicate reserve assets reached 1.85 trillion riyals, up 8.1% year-on-year, compared to external debt at 624.9 billion riyals in the second quarter of 2026.

Justin Alexander, economist at "Khalij Economics," said that the current year will mark the twelfth deficit in 13 years, and that estimates in the pre-budget statement see no near end to this path, warning that fiscal space is gradually eroding, and pointing out that the impact of Vision 2030 is not clearly visible in the four-year forecast window.

On the other hand, Akanksha Samdani, senior economist at "Oxford Economics," said the Kingdom possesses broad financing options and large fiscal reserves, but borrowing costs are becoming increasingly important as global interest rates remain high and debt levels rise. Milad Azar, financial analyst at "XTB," believes the Kingdom faces a more complex fiscal equation next year, expecting spending to be allocated more selectively if geopolitical shocks persist.

What Do These Terms Mean?

Fiscal Deficit: The difference between what the government spends and what it collects in revenues in a given year, resulting in a deficit when expenditures exceed revenues.

Sukuk: An Islamic financial instrument that functions like bonds, issued by a government or company, where the holder receives periodic returns, used in Saudi Arabia to finance projects and the budget.

Pre-Budget Statement: A document issued by the Ministry of Finance before approving the budget, presenting estimates of revenues and expenditures for upcoming years and outlining the expected deficit size.