On 2 December 2025, King Salman approved the Kingdom of Saudi Arabia’s budget for fiscal year 2026. The document — 350 billion dollars in total expenditure, a projected deficit of 44 billion dollars, and a GDP growth forecast of 4.6 per cent — told a story that no NEOM press release, no Mukaab rendering, and no giga-project announcement has ever told: the story of what Saudi Arabia can actually afford.
The budget contained no specific references to NEOM or New Murabba — a departure from previous budget cycles that had cited giga-projects as evidence of the Kingdom’s investment commitment. The omission was not accidental. It was the fiscal system’s acknowledgement that the projects which had defined Vision 2030’s public identity no longer commanded the political protection necessary for budget prominence.
Finance Minister Mohammed Al-Jadaan, speaking alongside the budget’s release, stated that the Kingdom would run deficits “until 2028.” He described the deficit as “by design” — a framing that presented fiscal imbalance as strategic choice rather than structural constraint. The distinction is important to the minister. It is less important to the treasury. The money is gone either way.
The Numbers
Total expenditures: 1.313 trillion riyals ($350 billion), declining from an estimated 1.336 trillion riyals in 2025. The reduction — approximately $6 billion — represents the first year-on-year decrease in government spending in the Vision 2030 era. Capital expenditure was allocated at 162 billion riyals ($43 billion).
Public revenues: approximately 1.147 trillion riyals ($306 billion). The gap between revenue and expenditure produced a projected deficit of 165 billion riyals ($44 billion), or 3.3 per cent of GDP. But the projection understated the actual fiscal position: the 2025 budget had projected a deficit of 101 billion riyals, and the actual deficit came in at 245 billion riyals — 5.3 per cent of GDP, a deviation of 143 billion riyals from the projection. The 2026 budget’s $44 billion projected deficit should be read in the context of a government that missed its 2025 deficit projection by 143 per cent.
The IMF welcomed the “recalibration” of Vision 2030 spending — diplomatic language for acknowledging that the government was spending more than it could afford and had decided to spend less. The IMF’s Article IV mission raised the 2026 GDP growth forecast to 4.5 per cent, driven by non-oil sector expansion.
The Oil Price Problem
The budget’s revenue assumptions are built on an oil price that the market has not delivered. The IMF’s fiscal breakeven oil price for Saudi Arabia — the price per barrel at which the government’s budget balances — was $96.20 for 2024, a 19 per cent increase year-on-year. The 2025 breakeven was estimated at $90.94.
Brent crude traded in the $60-65 range over the past year. The IMF assumed oil would average $66.94 per barrel in 2025 and $62.38 in 2026. The gap between breakeven ($90-96) and actual price ($60-66) is approximately $30 per barrel — a fiscal shortfall on every barrel the Kingdom produces and sells.
The oil price gap is not a temporary market fluctuation. It reflects structural factors: OPEC’s production cuts (total effective cuts of 5.86 million barrels per day, with Saudi Arabia bearing the largest voluntary cut of 1 million bpd, holding production at approximately 9 million bpd against a capacity of 12.5 million), the International Energy Agency’s projection of an implied oversupply of 3.8 million barrels per day in 2026 once disruptions end, and the gradual unwinding plan to return 2.2 million bpd over 18 months starting April 2026.
The arithmetic is punishing: Saudi Arabia is simultaneously cutting production to support prices and facing prices below the level needed to balance the budget. The production cuts reduce volume. The low prices reduce revenue per barrel. The combination produces deficits that the government finances through debt issuance — at a pace that is transforming the Kingdom’s balance sheet.
The Debt Surge
Saudi Arabia’s 2026 funding needs are approximately 217 billion riyals ($57.8 billion) — covering the 165 billion riyal deficit plus 52 billion riyals in maturing debt. The Kingdom’s dollar-denominated debt issuance surged 49 per cent in 2025 to approximately $100 billion, with sukuk (Islamic bonds) outpacing conventional bonds.
The Saudi debt capital market is expected to reach $600 billion in outstanding issuance by the end of 2026 — a 15 per cent increase from the $520 billion outstanding at the end of 2025. The trajectory describes a country that is borrowing at an accelerating rate to fund spending that revenue cannot cover.
The borrowing is not, by itself, alarming. Saudi Arabia’s debt-to-GDP ratio remains manageable by international standards, and the Kingdom’s sovereign credit ratings reflect the strength of its reserves and Aramco’s cash-generation capacity. But the direction is clear: from near-zero government debt in 2014 (when oil was above $100 and the budget was in surplus) to $600 billion in 2026 (when oil is below $70 and the budget is in deficit). The twelve-year trajectory is the fiscal cost of Vision 2030 — or, more precisely, the fiscal cost of Vision 2030’s ambitions exceeding its revenues.
The PIF Squeeze
The budget silence on NEOM and New Murabba reflects a deeper squeeze on PIF — the fund that owns and funds the giga-project portfolio.
In December 2024, PIF’s board approved a minimum 20 per cent spending reduction across its portfolio of more than 100 companies, including over 50 development entities linked to giga-projects. Some project budgets were cut by as much as 60 per cent. A $5 billion NEOM contract was reportedly cancelled the day before signing. Total construction contract awards fell from $71 billion in 2024 to under $30 billion in 2025 — a 60 per cent decline. PIF’s share of national construction awards dropped from 38 per cent to 14 per cent.
The funding squeeze was driven by the oil price’s impact on PIF’s revenue. Saudi Aramco reduced its 2025 dividend by approximately one-third to $84.5 billion. PIF’s 16 per cent Aramco stake meant that this dividend cut translated into at least a $6 billion income decline for the fund. PIF’s cash reserves fell to approximately $15 billion by late 2024 — the lowest level since 2020.
The combination — lower Aramco dividends, lower oil prices, higher fiscal deficits, and an $8 billion writedown on the giga-project portfolio — created a fiscal environment in which the only rational response was triage. The budget’s silence on NEOM and New Murabba is the fiscal system performing triage: preserving funding for projects with fixed international deadlines (Expo 2030, FIFA 2034) while quietly defunding projects without external accountability (The Line, the Mukaab).
The Shift
The 2026 budget’s capital allocation priorities reveal where the money went after it left the giga-project portfolio.
Expo 2030 Riyadh: top priority. Bechtel appointed as Programme Management Consultant in July 2025. Twenty-five per cent of the six-square-kilometre site levelled. Key building construction starting Q3 2026. The event — 1 October 2030 to 31 March 2031 — carries a fixed international deadline. The deadline enforces fiscal discipline that NEOM’s open-ended timeline could not.
FIFA 2034 World Cup: second priority. Fifteen stadiums across five cities. Stadium budgets already being reassessed after initial designs exceeded cost projections. But the World Cup’s commercial structure — broadcast rights, sponsorship revenues, ticket sales, FIFA’s institutional requirements — provides revenue offsets that the giga-projects lacked.
AI and data centre infrastructure: third priority. HUMAIN, PIF’s AI company, has sold out all data centre capacity and is planning 1.9 GW by 2030. The $5 billion DataVolt partnership at NEOM’s Oxagon and the $2.7 billion Hexagon contract represent the capital that moved from construction spectacle to digital infrastructure.
Mining: fourth priority. Saudi Arabia claims $1.3 trillion in untapped mineral wealth. PIF’s “Mining the Future” initiative targets copper, gold, phosphate, and rare earth elements as non-oil revenue sources.
The budget reveals what the renderings concealed: Saudi Arabia’s investment priorities are no longer determined by the architectural ambitions that characterised Vision 2030’s first decade. They are determined by the fiscal constraints that the first decade’s spending produced. The projects that receive funding are the projects that the government cannot afford to cancel — because they carry international deadlines, commercial obligations, or revenue models that justify continued spending.
What the Budget Reveals
The 2026 budget is the most honest document Vision 2030 has produced. Not because it contains revelations — the deficit, the debt, the oil price gap are all documented in IMF reports and financial press — but because it integrates them into a single fiscal framework that government officials must defend publicly.
Al-Jadaan’s statement — “We have no ego — absolutely no ego. If we announce something and we need to adjust it, accelerate it and make it a priority more than others, or defer or cancel it, we will without blinking” — is a budget speech, not a policy announcement. It is the finance minister telling parliament, investors, and credit rating agencies that the government recognises the gap between its ambitions and its means. The recognition is overdue. It is also, in a system where the Crown Prince’s personal imprimatur accompanies every major project announcement, politically brave.
Economy Minister Faisal al-Ibrahim reinforced the message: “We’re very transparent. We’re not going to shy away from saying we had to shift this project, delay it, re-scope it.” The transparency is selective — the ministers acknowledge delays and re-scoping but do not quantify the cost of the delays or explain why the original plans were approved at a scope the government’s own auditors subsequently found to be infeasible. But selective transparency, in a monarchy with no free press and no parliamentary opposition, is still transparency by local standards.
The Non-Oil Progress
The budget’s bright spot is real. Non-oil sectors now account for 55.6 per cent of real GDP — up from 45.4 per cent when Vision 2030 launched in 2016. Non-oil exports reached a record $25.9 billion in the fourth quarter of 2025, a 114 per cent increase from the first quarter of 2017. Non-oil public revenue increased 4.6 per cent in the first half of 2025. Saudi GDP grew 4.5 per cent in 2025 to $1.27 trillion, driven primarily by non-oil growth of 4.9 per cent.
These are not trivial achievements. The Saudi economy is genuinely diversifying. The diversification is producing measurable, auditable economic activity that did not exist a decade ago. The problem is not that the non-oil economy is failing. The problem is that it is not growing fast enough to replace the oil revenue that funds the budget, and that the oil revenue is declining faster than the non-oil economy is growing. The gap between the two curves is the deficit. The deficit is $44 billion. The deficit is “by design.”
The design required $50 billion at NEOM, $9 billion at Lucid Motors, $5.3 billion at LIV Golf, and an $8 billion writedown on the giga-project portfolio. The design required construction spending of $71 billion in a single year, followed by a 60 per cent cut the next year. The design required a fiscal breakeven oil price of $96 while actual oil prices traded at $66. The design is expensive. The budget is the bill.
This analysis draws on the Saudi Ministry of Finance 2026 Budget Statement (December 2025); statements by Finance Minister Mohammed Al-Jadaan and Economy Minister Faisal al-Ibrahim; the IMF Article IV Mission concluding statement; IMF fiscal breakeven oil price estimates; Saudi Aramco dividend disclosures; PIF annual reports and portfolio spending data; OPEC production cut data; IEA supply-demand projections; Arab News, Al Arabiya, the National, and GlobalSecurity budget reporting; Semafor and AGBI PIF spending analyses; and Bloomberg reporting on Saudi fiscal policy. Vision2030.AI is editorially independent and is not affiliated with the Ministry of Finance, PIF, or any official Vision 2030 entity.