Fitch Warns of Rising Fiscal Risks for Saudi Arabia Amid Oil Price Dip, Spending Commitments

Riyadh, October 3, 2025 (Saudi Arabia Breaking News) – Saudi Arabia’s path to fiscal consolidation faces risks due to lower oil prices and heavy spending linked to Vision 2030, Fitch Ratings said on Friday.

Fitch’s warning followed the government’s 2026 pre-budget statement on Tuesday, which signaled a shift toward tighter fiscal discipline after a sharper-than-expected widening of the 2025 deficit.

The government now forecasts a shortfall of 5.3% of GDP in 2025, nearly double the 2.3% initially projected, before narrowing to 3.3% in 2026. This compared with an earlier estimate of 2.9% for next year.

Fitch said the deterioration in 2025 was driven by weaker oil income and overspending, while non-oil revenues likely remained robust on the back of a strong non-oil economy and conservative budgeting.

Saudi Arabia’s Vision 2030 transformation plan, led by the nearly $1 trillion Public Investment Fund (PIF), requires hundreds of billions of dollars in investment for projects such as NEOM, the Red Sea development almost the size of Belgium.

The government forecasts revenues will rise 5.1% in 2026 while spending falls 1.7% versus 2025 projections. Fitch expects fiscal tightening through stable oil revenues, higher non-oil income, and modest spending cuts.

Reuters reported in April that falling oil prices were increasing pressure on Saudi Arabia to either rein in spending or raise debt to finance its agenda. Fitch said the fiscal strain underscored the Kingdom's continued vulnerability to oil market swings.