Why Saudi Arabia’s Bigger 2025 Deficit Isn’t a Currency Crisis

Saudi Arabia has more than doubled its 2025 budget deficit estimate to SAR 245 billion (5.3% of GDP), compared with SAR 101 billion projected last year. The jump reflects lower oil revenues and significant capital spending under Vision 2030, the kingdom’s ambitious development plan.

Our Take:

While headlines might make this look concerning, the good news is that the Saudi riyal remains secure. The currency is pegged to the US dollar, which stabilizes inflation and exchange rates. Strong financial reserves further support the peg, reducing any immediate risk to the currency.

More importantly, most of this deficit is capital expenditure, not day-to-day spending. Projects include infrastructure, industrial development, and other initiatives aimed at boosting non-oil GDP. These investments are intended to generate economic returns over time, rather than strain current finances.

Looking ahead, the Finance Ministry expects the deficit to narrow over the next few years: SAR 165 billion in 2026, SAR 120 billion in 2027, and SAR 125 billion in 2028. This shows that 2025’s higher deficit is a strategic, front-loaded investment rather than a recurring fiscal problem.

💡 Bottom line: Saudi Arabia’s 2025 budget deficit may be bigger than expected, but it doesn’t threaten the riyal. Strong reserves, the USD peg, and smart capital spending position the kingdom for long-term growth, turning today’s deficit into tomorrow’s economic gains.

Understanding macroeconomic shifts is key to planning ahead. Algorithm Research offers in-depth insights on Gulf economies and global trends. Get in touch with us to discuss how these insights can support your strategic goals.