The government of Saudi Arabia expects its borrowing to increase next year, driven by ongoing financing needs and a broad backdrop of monetary easing, according to a projection by CI Capital. The analysis suggests that softer interest rates and tightening liquidity could compel Riyadh to tap debt markets once again to meet fiscal and development commitments.

Total government spending in the approved 2026 budget stands at 1.31 trillion riyals, against estimated revenues of 1.15 trillion riyals - leaving a deficit of around 165 billion riyals, or roughly $44 billion. That shortfall, while narrower than 2025's estimated deficit, underscores the significance of external and domestic borrowing to close the funding gap.

The pressure to borrow is further amplified by the state's ambitious development agenda under the framework of Saudi Vision 2030. The drive to diversify the economy beyond oil by investing in infrastructure, industry, tourism, and services means that capital needs remain substantial, even as the Kingdom moderates some elements of its spending.

At the same time, the financial sector is demonstrating signs of increased strain. The Saudi Arabian Monetary Authority and banks report robust credit growth outpacing deposit accumulation, leading lenders to rely more heavily on external wholesale funding and bond issuance. That shift has made broader external borrowing more attractive for the government, particularly with global interest rates and domestic funding costs trending downward.

The 2026 budget outlines a pivot from massive real-estate megaprojects toward boosting industrial capacity, logistics, technology, and diversified economic sectors. Nevertheless, the scale of planned investments-including a pipeline of projects worth over 2.1 trillion riyals-remains sizable.

Credit rating agencies and financial analysts have flagged rising fiscal risks as oil revenues remain volatile and global economic uncertainty mounts. Yet the nation's debt-to-GDP ratio remains relatively low compared with many peers, providing fiscal flexibility for additional borrowing.

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