Saudi Pre-Budget Statement Points to Wider Deficits, Fitch Says

Fitch Ratings said Saudi Arabia's 2027 pre-budget statement captures the fiscal strain the kingdom has absorbed since the US-Iran war, with spending above plan and deficits wider than budgeted. The agency, which rates Saudi Arabia A+ with a stable outlook, called conflict-related disruption to oil revenue the biggest risk to the projections.

Released on September 30, 2026, ahead of the budget's fourth-quarter approval, the statement puts the 2026 deficit at 4.9% of GDP, wider than the 3.3% the 2026 budget targeted and narrower than 2025's 5.8%. Spending is estimated at $382.7 billion (SAR1.4 trillion), 9.3% above the $350.1 billion (SAR1.3 trillion) budgeted. Revenue is put at $317.3 billion (SAR1.19 trillion) against $305.9 billion (SAR1.15 trillion) planned, as higher Saudi crude prices outweighed disrupted production.

Those figures imply restraint for the rest of 2026, after spending was pulled forward in the first quarter as a precaution. Fitch's September 29 forecast has the 2026 deficit at 6.2% of GDP, on more spending and less revenue than the government assumes. The fourth quarter is usually the heaviest for spending, and outturns have often run above earlier projections.

2027 and 2028

For 2027 the statement projects spending of $371.2 billion (SAR1.4 trillion), revenue of $320.5 billion (SAR1.2 trillion) and a deficit of $50.9 billion (SAR191 billion), or 3.6% of GDP. That is below 2026's 4.9% but above the 2.3% the 2026 budget pencilled in. The 2028 projection rose to 3.1% from 2.2%, largely on higher spending.

Fitch assumes the 2027 figure includes extra outlays on logistics corridors, the road and rail routes linking Gulf ports to Red Sea ports and to countries to the north, along with higher military spending and counter-cyclical stimulus. The statement leans harder on spending efficiency than recent editions, and Fitch expects slower growth in day-to-day expenditure, though absolute cuts will be difficult.

Revenue forecasts barely moved, with 2028 only 0.6% above the 2026 budget's figure, and no new taxes or rate changes are detailed. Fitch projects a 2027 deficit of 3.7%, close to the official 3.6%, widening to 4.4% in 2028 on Brent averaging $60 a barrel that year, down from $70 in 2027. The ministry does not publish the price it assumes.

In 2029 the deficit widens to 3.3% of GDP, the largest any pre-budget statement has projected for the final year of its three-year horizon, reflecting higher spending likely tied to Vision 2030. Finance Minister Mohammed Aljadaan said the 2027 deficit reflects a policy of keeping the fiscal position strong, with debt at sustainable levels and substantial reserves.

Debt and oil output

No updated debt path was published. Fitch said the deficits imply debt near 39% of GDP by the end of 2028, against about 32% at the end of 2025 and still below the 58% median for sovereigns in its "A" category. It forecasts 42.5% on a lower nominal GDP projection. Borrowing continues at home and abroad through bonds, sukuk and loans, with the 2027 plan due by the end of the year.

Fitch calculated that the official growth projections imply average oil production of about 10.6 million barrels per day in 2027. Output was above that at the end of September after flows were fully restored through the East-West Pipeline, which carries crude to the Red Sea and bypasses the Strait of Hormuz. The speed of the recovery points to the energy sector's technical capacity, Fitch said, and the range of export routes supports resilience.

The statement estimates a 3.6% contraction in real GDP for 2026, with oil activities down 21.8% and non-oil activities up 3.2%, followed by growth of 12.8% in 2027, 3.9% in 2028 and 5.7% in 2029. Fitch expects a smaller 16.7% fall in real oil-sector GDP this year.

Non-oil revenue reached $134.7 billion (SAR505 billion) in 2025, up from $44.3 billion (SAR166 billion) in 2015, covering 36% of total spending against 17% a decade earlier.