DUBAI: Saudi Arabia reported a first-quarter fiscal deficit of 125.7 billion riyals (USD33.5 billion), not far off its full-year projection of USD44 billion, as it hikes spending to support the economy amid disruption caused by the Iran war.
Iranian attacks on Gulf states, in response to US-Israeli strikes that began on February 28, have damaged major energy facilities and disrupted shipping through the Strait of Hormuz, which would normally handle about 20 percent of global oil and liquefied natural gas flows.
Despite higher oil prices, Saudi economic growth is expected to slow sharply this year, including in non-oil sectors such as tourism.
Total government spending reached 386.7 billion riyals in the first quarter, up 20 percent year-on-year, outpacing revenues of 261.0 billion riyals, the finance ministry said.
“Despite the marked widening in the 1Q deficit, we still see scope for a smaller deficit for 2026 full-year than in 2025,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “The marked rise in oil prices from March will counterbalance the loss in output.”
Oil revenues declined 3 percent to 144.7 billion riyals from 149.8 billion riyals in Q1 2025.
Non-oil revenues rose 2 percent to 116.3 billion riyals from 113.8 billion riyals a year earlier.
Military spending increased 26 percent to 64.7 billion riyals compared with 51.4 billion riyals in Q1 2025.
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