Saudi Arabia’s ambitious Vision 2030 goals may be hitting a hard financial wall. On Friday, Fitch Ratings issued a warning about rising financial risks for Riyadh as oil prices decline and government spending continues to grow, jeopardizing the kingdom’s plans for fiscal stability.
The figures paint a clear picture: Saudi Arabia now anticipates a budget deficit of 5.3% of GDP in 2025, nearly double the initial forecast of 2.3%. This deficit is expected to shrink to 3.3% in 2026. According to Fitch, this downturn is primarily due to falling oil revenues, while non-oil income remains steady but is insufficient to bridge the gap. The agency highlighted revenue shortfalls and excessive spending as key factors, especially given the substantial investments required for megaprojects like NEOM.
This week’s pre-budget announcement from Riyadh indicated a move toward stricter fiscal discipline. However, Fitch pointed out the ongoing tension between Saudi Arabia’s commitments to restraint and its dependence on the Public Investment Fund’s trillion-dollar Vision 2030 initiative.
This situation is further complicated by declining crude prices, with Brent dipping over 7% this week amid speculation of additional OPEC+ supply increases. These potential increases are contentious; sources have indicated that Saudi Arabia is seeking much larger quota boosts than Russia.
While such moves could help regain market share, they may also exert more pressure on oil prices. OPEC has already rebuffed claims of a half-million-barrel increase, calling the reports “wholly inaccurate.” This conflict underscores the stakes: Saudi Arabia’s financial health relies on a stable oil market, yet its production strategy aims to secure long-term relevance, even if it risks lower prices in the short term.
Fitch suggested that fiscal tightening will ultimately result from modest spending cuts, stable oil revenues, and ongoing growth in non-oil income. Nevertheless, the kingdom’s susceptibility to oil price fluctuations remains evident. While Vision 2030 aims to reduce dependency on crude, for now, Saudi Arabia’s financial situation is still closely tied to it.
