Saudi Arabia’s fiscal deficits are likely to remain wider than budget targets through 2029 as higher spending, oil-price assumptions and conflict risks weigh on the kingdom’s fiscal outlook, Fitch Ratings said.
Saudi Arabia projects a deficit of 4.9% of gross domestic product in 2026, above its budget target but below the 5.8% deficit recorded in 2025. Fitch, however, forecasts a larger deficit of 6.2% of GDP this year.
The Public Budget Statement implies that spending will be cut in the second half of 2026 compared with the first half, although actual spending has frequently exceeded budget allocations.
Higher spending could widen deficits
The government has raised its projected deficits for coming years. The 2027 deficit is now forecast at 3.6% of GDP, up from 2.3%, while the 2028 deficit is projected at 3.1%, compared with an earlier estimate of 2.2%.
Fitch expects deficits of 3.7% of GDP in 2027 and 4.4% in 2028, based partly on a lower Brent crude price assumption of $60 a barrel compared with $70 in 2027.
The ratings agency said additional spending could support logistics corridors, military expenditure and counter-cyclical stimulus.
Saudi Arabia’s official 2029 deficit forecast stands at 3.3% of GDP, the largest outer-year deficit included in any of its recent budget statements. Spending is likely to remain elevated as the kingdom advances its Vision 2030 projects.
The government expects economic growth to accelerate to 5.7% in 2029 from 3.9% in 2028.
Debt expected to rise despite fiscal buffers
The latest budget statement did not provide a revised debt trajectory. Fitch expects Saudi Arabia’s debt-to-GDP ratio to rise to about 39% by the end of 2028, from 32% at the end of 2025.
That would remain below the 58% median for A-rated sovereigns, although Fitch’s own forecast puts the ratio at 42.5%.
The agency said conflict-related disruption to oil revenues represents the biggest risk to its fiscal outlook. Its growth forecasts imply Saudi oil production of about 10.6 million barrels per day in 2027.
Third-party sources cited by Fitch indicated that Saudi production was above that level at the end of September after the East-West pipeline was fully restored, while the kingdom’s diversified export routes provide additional resilience.
