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.
The Israeli military said it had begun targeted strikes in southern Lebanon on Wednesday in response to a "Hezbollah violation", a day after the latest round of U.S.-facilitated talks between Israel and Lebanon took place in Rome.
A proposed deal between Iran and Oman would give Tehran control over ships entering the Gulf through the Strait of Hormuz, a senior Iranian source and two regional officials told Reuters on Wednesday, in one of the biggest concessions yet to Iran.
The U.S. Treasury said on Wednesday it had removed counter-terrorism sanctions from Iraq's Fly Baghdad Airlines and two aircraft that were imposed in 2024 over links to Iran's Islamic Revolutionary Guard Corps Quds Force, citing changes in the airline's behavior.
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