Saudi Arabia's Finance Minister Confirms Expansionary Spending In 2026 Budget To Support Economic Growth

Saudi Arabia's Finance Minister, Mohammed Aljadaan, confirmed the government's commitment to expansionary spending in the 2026 budget. He emphasised the importance of stability and medium-term planning. The total expenditure is projected to reach SAR1.313 trillion in 2026 and SAR1.419 trillion by 2028, with revenues expected to grow due to accelerated economic growth.

Aljadaan highlighted that despite significant spending on major strategies and projects, the government remains focused on improving core services such as education, health, social services, and municipal services. These sectors will receive SAR533 billion in 2026. He stressed that both the government and private sector must work hard to maximise impact starting next year.

The minister provided an update on Saudi Vision 2030, revealing that 93% of its performance indicators are either achieved or on track. Additionally, 85% of initiatives are completed or progressing as planned. By 2030, 299 indicators have already met their targets ahead of schedule.

Aljadaan noted that non-oil activities have grown significantly, reaching a historic level of 55.4%. He expects the target for 2030 will be met by then or even earlier. The number of micro, small, and medium enterprises has also surged from approximately 500,000 to 1.7 million establishments.

The minister addressed budget deficits, explaining they differ based on their purposes. In Saudi Arabia's case, deficits are strategic and align with government policy assessing economic capacity and financial strength. "The aim is for this borrowing of SAR245 billion to generate a return higher than its cost," he stated.

He elaborated that economic growth has averaged 5% in the non-oil sector over recent years. The returns from current expenditures will materialise in future years. Therefore, continued spending is justified as long as returns exceed borrowing costs.

Sustainability and Public Investment Fund

Aljadaan discussed sustainability efforts and the Public Investment Fund's (PIF) growth from SAR150 billion to over SAR800 billion in assets recently. However, he clarified that PIF does not distribute profits to the government since its focus is long-term investment for future generations' benefit.

The minister also mentioned that loans could theoretically be reduced by requesting distributions but doing so would not align with sustainability goals.

Health and Education Spending

Regarding health and education spending, Aljadaan noted expenditures will surpass SAR460 billion next year. He clarified this does not conflict with privatisation efforts. For instance, privatising a hospital involves transferring an asset providing free services to citizens into private hands while budgeting for public service purchases from it.

Long-term Planning and Flexibility

In response to questions about project structuring over a 15-year period, Aljadaan affirmed readiness must exist to adapt to variables during that timeframe. This means scaling down one project or expanding another based on needs and developments may be necessary.

The minister reiterated Prince Mohammed bin Salman's statement: "The primary goal is the citizen and the support the citizen receives." He cited examples of social support provided in the 2025 budget as evidence of this commitment.

Aljadaan concluded by stating real GDP growth is expected at 4.4% by end-2025 while nominal GDP should reach SAR5.6 trillion by 2028. Although full sustainability hasn't been achieved yet due to oil price impacts on revenues, meeting Saudi Vision 2030 targets will ensure long-term sustainability.

With inputs from SPA