Saudi Approves SAR 217 Billion 2026 Borrowing Plan to Cover Deficit

On Jan. 3, 2026, Finance Minister Mohammed bin Abdullah Al-Jadaan approved the Kingdom’s Annual Borrowing Plan for the 2026 fiscal year, following endorsement by the National Debt Management Center’s board. A statement from the National Debt Management Center put gross financing needs at roughly SAR 217 billion, equivalent to about $57.9 billion, intended to cover a projected budget deficit of SAR 165 billion and to repay maturing debt principal of some SAR 52 billion.

The projected 2026 deficit equals about 3.3 percent of gross domestic product under the center’s figures. That is materially smaller than the estimated 2025 shortfall of about SAR 245 billion, a gap the debt center links to weaker oil prices and output as well as government spending that exceeded budget targets by roughly 4 percent last year. The narrowing of the deficit provides some fiscal relief, but the scale of 2026 financing still represents a meaningful drain on domestic liquidity and a test for local capital markets.

The borrowing plan goes beyond simple sovereign issuance. It signals an explicit push to diversify financing instruments and to broaden the investor base. The statement said the 2026 program will include a review of the kingdom’s SAR-denominated Sukuk issuance calendar and an expansion of alternative government financing over the medium term, highlighting project and infrastructure funding and the use of export credit agencies within prudent risk-management frameworks. Those measures reflect a policy choice to align debt issuance with large-scale investment projects tied to the country’s transformation agenda.

Market implications are immediate. A gross funding requirement near $58 billion will increase borrowing supply in the local riyal market and could push domestic yields higher if banks and institutional investors do not absorb new issuance comfortably. The emphasis on Sukuk and project finance aims to lengthen the maturity profile and attract specialized investors, but development of those deeper instruments will require robust execution and clear risk-sharing terms to avoid crowding out private lending to the non-oil sector.

The plan also underscores the government’s strategy to finance Vision 2030-related projects while managing fiscal risks. The Finance Minister framed approval of the plan as a national achievement, attributing it to "the grace of God Almighty," the directives of the Kingdom’s leadership, and "continuous follow-up" from senior transport and aviation officials, linking borrowing decisions to infrastructure priorities such as airport expansion and other capacity projects.

Longer term, the mix of conventional sovereign debt, local Sukuk, and export-credit-supported project financing will shape Saudi Arabia’s public debt profile and its cost of capital. If successfully deployed, project-focused financing could support revenue diversification and reduce reliance on hydrocarbon receipts. However, it raises the importance of transparent project selection, contingent-liability management, and coordination between fiscal authorities and state-owned enterprises to keep public debt sustainable as investment commitments rise.