Saudi Arabia ended 2025 with a bigger budget deficit than expected. In the fourth quarter, the deficit reached 94.85 billion riyals, or about $25.28 billion. In the third quarter, it was 88.5 billion riyals. So, the gap clearly grew. But why did this happen? And what does it mean for the country’s future? Let’s break it down.
Quarterly Comparison At a Glance
| Category | Q3 2025 (SAR bn) | Q4 2025 (SAR bn) | Change |
| Total Revenue | 269 | 276 | +7 |
| Total Spending | 358.4 | 371 | +12.6 |
| Budget Deficit | 88.5 | 94.85 | +6.35 |
| Oil Revenue | 150.816 | 154.185 | +3.369 |
| Non-Oil Revenue | 119 | 122.6 | +3.6 |
Spending Continues to Rise
First, government spending increased. In the fourth quarter of 2025, Saudi Arabia spent 371 billion riyals. In the third quarter, spending was 358.4 billion riyals. That is a noticeable jump. When a government spends more than it earns, a deficit appears. That is exactly what happened. Although revenues went up, they did not rise fast enough to match spending. So, higher expenses played a major role in widening the deficit.
Revenue Increases, But Not Enough
At the same time, total revenue also improved. In Q4, Saudi Arabia earned 276 billion riyals. In Q3, it earned 269 billion riyals. This shows growth. However, the increase was small compared to spending. The government spent 371 billion riyals but earned only 276 billion. The math is simple. The gap remained large. Therefore, even with better income, the deficit grew.
Oil Revenue: A Mixed Picture
Oil is the backbone of Saudi Arabia’s economy. The kingdom is the world’s top oil exporter. So naturally, oil revenue matters a lot. In Q4, oil revenue reached 154.185 billion riyals. In Q3, it was 150.816 billion riyals. This rise happened because the country increased oil production.
That sounds positive. However, there is another side to the story. Despite the quarterly increase, total oil revenue for the whole year of 2025 was down 20 percent compared to 2024. This shows how unstable oil markets can be. Prices change. Demand shifts. Global events affect supply. As a result, depending too much on oil can be risky.
Non-Oil Revenue Shows Slow Growth
Because of this risk, Saudi Arabia has been working to grow non-oil sectors. This effort is part of Vision 2030. The plan aims to diversify the economy. In simple words, the country wants to rely less on oil.
In Q4, non-oil revenue reached 122.6 billion riyals. In Q3, it was 119 billion riyals. So, there was some growth. However, over the full year, non-oil revenue growth was almost flat compared to 2024. That means progress was slow. Is diversification happening? Yes. But is it happening fast enough? That remains a key question.
Expansionary Policy Under Vision 2030
Saudi Arabia continues to follow an expansionary fiscal policy. This means the government spends more money to support economic growth. It invests in infrastructure, tourism, technology, and entertainment. These investments are designed to build a stronger future. They support Vision 2030 goals. However, they also increase short-term spending. So, while the long-term plan looks ambitious, the short-term cost is high.
For the full year 2025, the budget deficit reached 276 billion riyals. Earlier, the expected deficit was 245 billion riyals. Even that number had already been revised upward from initial estimates. In the end, the actual deficit was higher than predicted.
This raises an important question. Can the government keep spending at this pace without increasing financial pressure?
Rising Debt Levels
To cover the deficit, Saudi Arabia is borrowing money. By the end of 2025, total debt stood at 1.52 trillion riyals. At the end of 2024, debt was 1.22 trillion riyals. That is a rise of 300 billion riyals in just one year. Borrowing helps the government continue funding projects. However, debt must be repaid. Often, interest is added. Therefore, higher debt can create pressure in the future. Managing debt wisely will be critical.
Conclusion
Saudi Arabia stands at an important moment. On one hand, it is investing heavily in change. Vision 2030 aims to reshape the economy and reduce oil dependence. On the other hand, oil revenue remains volatile, and non-oil growth is still developing. If non-oil sectors grow faster, the country could become more stable and less exposed to oil price swings. However, if oil markets stay weak and diversification slows, deficits may continue.
In conclusion, Saudi Arabia’s fourth-quarter results show both progress and pressure. Spending is rising. Revenue is improving. Yet the gap remains wide. The coming years will decide whether today’s heavy investments lead to tomorrow’s stronger economy.
