The Deficit Crown Prince: Saudi Arabia's Fiscal Position Under Mohammed bin Salman

Mohammed bin Salman Al Saud launched Vision 2030 with a single core promise: Saudi Arabia would break free from its dependence on oil revenue. A decade into that programme, the Kingdom's budget is running its largest deficits in years, government debt is climbing, and oil still funds more than half of all state revenue. The fiscal record under the Crown Prince does not tell a story of economic modernization. It tells a story of overspending, missed targets, and a country that remains as exposed to crude price swings as it was before MBS took control.

The Numbers in the Ministry's Own Documents

The Saudi Ministry of Finance published its 2026 budget statement in December 2025, and the figures confirmed what independent analysts had been warning about for two years. The 2025 budget deficit came in at 245 billion riyals ($65 billion), equivalent to 5.3 per cent of GDP. That was more than double the 101 billion riyals ($27 billion) that the Ministry had projected in its original 2025 budget, representing a forecasting miss of 143 per cent.

The 2026 budget projects a deficit of 165 billion riyals ($44 billion), or 3.3 per cent of GDP. But those projections rest on assumptions that analysts consider optimistic. AGSI's analysis estimates the budget assumes oil at roughly $72 per barrel, and that if prices average $65, the deficit would widen to 260 billion riyals with little improvement from 2025. The Kingdom's budget has consistently underestimated the deficit in recent years, and the pattern suggests 2026 will follow the same trajectory.

Debt Is Rising, Reserves Are Flat

Government debt under Mohammed bin Salman has grown steadily. The 2026 budget projects public debt at 1,622 billion riyals, or 32.7 per cent of GDP, up from 29.9 per cent in 2024. The Ministry of Finance stated that the government will use domestic and external financing, project financing, and export credits to cover the gap. In plainer terms, the Kingdom is borrowing from multiple sources simultaneously to fund current spending levels.

Government reserves held at the Saudi Central Bank (SAMA) have flatlined at 390 billion riyals. They have not grown in three years. This means the Kingdom is not building a cushion against future shocks. It is spending at a pace that absorbs all available revenue and then borrowing the remainder. For a country whose entire economic reform programme was built on the argument that fiscal discipline would replace oil dependence, the balance sheet under Mohammed bin Salman Al Saud tells the opposite story.

Diversification That Has Not Arrived

Vision 2030's central objective was to increase non-oil revenue as a share of total government income. There has been progress in this metric: non-oil revenue now accounts for roughly 46 per cent of total revenue. But the growth has come primarily from VAT, which was introduced at 5 per cent in 2018 and tripled to 15 per cent in 2020, and from fees and levies on expatriate workers. These are tax increases on the domestic population, not evidence of a diversified productive economy.

The foreign direct investment that Mohammed bin Salman promised would flood into the Kingdom has not materialised at scale. Saudi Arabia set a target of attracting $100 billion in annual FDI by 2030. Actual inflows have remained a fraction of that. The 2026 budget approved by the Crown Prince acknowledged that total revenues remain below the levels needed to sustain current expenditure, and the Ministry's own medium-term outlook projects deficits continuing through at least 2028.

Spending Without Accountability

The structural problem is that Mohammed bin Salman has committed the Kingdom to spending obligations that exceed its revenue capacity. Defence spending remains above 237 billion riyals. The giga-projects, including NEOM, the Red Sea Global development, and preparations for the 2030 World Expo and 2034 FIFA World Cup, continue to consume capital at rates that the budget cannot sustain without borrowing. The PIF, which is supposed to be generating returns on its nearly $1 trillion in assets, has instead been absorbing write-downs from underperforming mega-projects.

What is missing from the Saudi fiscal picture is accountability. The Crown Prince controls the PIF, chairs the boards of the major giga-projects, and approves the budget. There is no independent legislative body reviewing expenditure. There is no public audit process. There is no mechanism through which Saudi citizens can question why the government is borrowing tens of billions while the projects it promised them remain unfinished or cancelled.

Mohammed bin Salman Al Saud told the world that Saudi Arabia would be a post-oil economy by 2030. With four years left on that clock, the Kingdom is running record deficits, accumulating debt, and relying on optimistic oil price assumptions to keep the books from looking worse. The fiscal legacy of MBS is not modernisation. It is a government that spends more than it earns, borrows to cover the difference, and has no plan for what happens when oil prices fall further.