Saudi Arabia said Tuesday it would run a budget deficit of 5.3 per cent of GDP this year, more than double the previous forecast, with oil revenues falling and higher-than-expected spending.
The deficit is forecast to remain high in 2026 at 3.3 per cent of GDP, or 165 billion riyals ($44 billion).
The finance ministry, which had previously forecast a 2025 deficit of just 2.3 per cent of GDP, forecast expenditures of 1.3 trillion riyals and revenues of 1.15 trillion.
It predicted GDP growth of 4.4 per cent this year, driven by a five per cent increase in 鈥渘on-oil activities鈥�, and of 4.6 per cent next year.
The Arab world鈥檚 largest economy is engaged in a major drive to diversify its economy and reduce its dependence on oil revenues, with a focus on business and tourism.
That includes megaprojects such as Neom, a futuristic desert metropolis.
Those efforts come at a significant financial cost at a time when the finance ministry expects a decline of 13.4 per cent in state revenues.
That is driven in large part by recent falls in oil prices, which had spiked following the Covid-19 pandemic and Russia鈥檚 2022 invasion of Ukraine.
Aramco, the world鈥檚 largest oil exporter and a cornerstone of the Saudi economy, has experienced a decline in its profits over ten consecutive quarters since achieving record results at the end of 2022.
Its profits fell 4.6 per cent on a yearly basis in the first quarter of the year, and by 22 per cent in the second quarter.
The ministry expects Saudi Arabia鈥檚 deficit to persist in 2027 and 2028, though shrinking to 2.3 per cent and then 2.2 per cent of GDP.