Saudi Arabia Balances Expansionary Spending, Financial Stability in Its 2026 Borrowing Plan

06/01/2026 02:51 AST

Saudi Arabia has unveiled its annual borrowing plan for 2026, a move that underscores the growing maturity of its fiscal policy and its ability to align ambitious expansion under Vision 2030 with long-term financial stability.

The plan seeks to strike a careful balance between financing large-scale development projects and preserving strong credit fundamentals, supported by recent upgrades from international rating agencies that have boosted confidence in the Saudi economy.

According to the official statement issued by the National Debt Management Center at the Ministry of Finance, the Kingdom's total financing needs for 2026 are estimated at SAR 217 billion ($57.9 billion). This amount will cover an expected budget deficit of SAR 165 billion ($44 billion), in addition to SAR 52 billion ($13.9 billion) in debt principal repayments.

Compared with the 2025 borrowing plan, which projected financing needs of SAR 139 billion ($37.1 billion), the 2026 target represents a 56 percent increase. This sharp rise reflects an accelerated pace of capital spending on major development projects. Despite the higher nominal deficit, the plan points to improved macroeconomic management, with the deficit-to-GDP ratio expected to decline to 3.3 percent in 2026 from 5.3 percent in 2025.

The improvement is driven by strong anticipated growth in nominal GDP, projected to rise in 2026. This expansion reduces the relative burden of the deficit and reinforces fiscal sustainability, indicating that government spending is generating economic growth at a pace exceeding borrowing.

The National Debt Management Center has already secured SAR 61 billion ($16.3 billion) of the 2026 financing needs in advance during 2025, enhancing the government's flexibility in navigating global market volatility.

By the end of 2025, the debt portfolio reflects a cautious risk-management approach: 87 percent of debt carries fixed interest rates, shielding public finances from global rate fluctuations. The average maturity stands at nine years, with an average funding cost of 3.79 percent.

Looking ahead, the 2026 strategy is built on diversified funding sources. Local debt issuance, mainly riyal-denominated sukuk, is expected to account for 25-35 percent of financing. International markets, particularly US dollar-denominated instruments, will provide 20-30 percent. The largest share - up to 50 percent - will come from private markets, including syndicated loans and export credit agency facilities.

The plan forecasts real GDP growth of 4.6 percent in 2026, driven by non-oil activities and private-sector leadership. It also highlights proactive measures taken in 2025, including $16 billion in early debt buybacks and the issuance of euro-denominated green bonds, expanding Saudi Arabia's investor base and strengthening its sustainable finance credentials.

Asharq Al Awsat