Saudi Arabia’s budget deficit widened sharply in the first quarter, reaching its highest level since 2018 as government spending on economic diversification projects continued to rise, Bloomberg reported on Friday.
The financial impact of the conflict with Iran, which began in late February, is expected to become clearer in second-quarter data, Bloomberg noted © Mena Today
Saudi Arabia’s budget deficit widened sharply in the first quarter, reaching its highest level since 2018 as government spending on economic diversification projects continued to rise, Bloomberg reported on Friday.
According to data from the Ministry of Finance cited by Bloomberg, the kingdom recorded a deficit of 125.7 billion riyals ($33.5 billion). This compares with a deficit of 95 billion riyals in the final quarter of 2025 and more than double the level seen a year earlier.
Oil revenues fell by around 3% year-on-year in the first quarter, while total spending surged by roughly 20%, reaching about $103 billion. The figures highlight growing fiscal pressure on the Middle East’s largest economy.
Saudi Arabia’s gross domestic product grew by 2.8% year-on-year in the first quarter, marking its slowest pace since mid-2024.
The financial impact of the conflict with Iran, which began in late February, is expected to become clearer in second-quarter data, Bloomberg noted. Now in its third month, the conflict—despite a fragile truce—has disrupted regional economies.
Damage to infrastructure and the closure of the Strait of Hormuz to energy exports have weighed on Saudi Arabia. However, the kingdom has managed to redirect most of its oil exports through the Red Sea port of Yanbu, helping to limit the disruption.
Saudi Arabia and Syria signed a cooperation agreement between the two countries' defense ministries on Wednesday, Saudi state news agency SPA reported, as Yemen's Iran-aligned Houthi group continues its missile and drone attacks on the kingdom.
Turkey's parliament is set on Wednesday to ratify a defence pact with Saudi Arabia and Pakistan that includes a collective defence clause, committing NATO's second-largest army to Riyadh's defence as it faces attacks by Yemen's Iran-backed Houthis.
Iran and the United States are still far from a deal to end their war, a senior Iranian official told Reuters on Tuesday, as US President Donald Trump declined to rule out a resumption of US combat operations after the elections in the United States.
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