## Saudi Arabia’s Path Forward Amid Lower Oil Prices

_IMF News, December 18, 2025_

## Source details

**Canonical URL:** [Saudi Arabia’s Path Forward Amid Lower Oil Prices](https://www.imf.org/en/news/articles/2025/12/18/cf-saudi-arabias-path-forward-amid-lower-oil-prices)

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## Bibliographic details
- Authors: Amine Mati, Yuan
- Published: December 18, 2025

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### Overview
- Next year will be pivotal for Saudi Arabia as it moves beyond the favorable tailwinds of 2022–2024 into a more challenging environment characterized by lower oil prices and rising financing needs.
- The country is strategically shifting some spending priorities toward AI and advanced technologies as part of broader diversification efforts under Saudi Vision 2030.
- Key strengths: reduced exposure to oil fluctuations, low public debt-to-GDP ratios, and ample foreign assets.

### 2025 economic performance and structural progress
- Oil prices fell nearly 30 percent below their 2022 peak, yet the non-oil economy maintained strong momentum in 2025.
- Progress linked to Saudi Vision 2030 reforms:
  - Diversification gaps with emerging markets have narrowed.
  - The business environment now rivals that of advanced economies.
  - Private sector job creation has surged, particularly among women.
  - Unemployment rates reached record-lows.
- Continued reforms are essential to close remaining gaps with advanced economies and keep the transformation on track.

### Fiscal policy, public investment, and sustainability
- The recent decision to reprioritize some large investment projects helped:
  - Focus spending on higher-impact areas.
  - Mitigate the risk of economic overheating.
- Over the medium term, critical fiscal measures include:
  - Continued non-oil revenue mobilization (non-oil revenue has doubled over the past five years).
  - Energy subsidy reform.
  - More efficient public spending.
- Fiscal institutions and debt/asset management priorities:
  - Adhere to established spending ceilings.
  - Continue prudent debt management.
  - Develop a proper strategy for managing sovereign assets and liabilities.
- Multi-year, consistent frameworks for spending decisions are vital as funding pressures linked to large investment projects rise.

### Financial sector oversight and market development
- Strong financial sector oversight will support healthy credit growth as banks increasingly rely on short-term external funding.
- The Saudi Central Bank should maintain vigilance in monitoring emerging risks and proactively deploy prudential measures to preserve financial system resilience.
- Deepening capital markets is recommended to:
  - Allow companies to raise more financing via bonds and equity.
  - Ease pressure on banks.
  - Facilitate credit for small and medium enterprises.
  - Create a more balanced mix of funding for the economy.

### Labor market, private sector, and investment climate
- Sustaining growth will increasingly depend on:
  - A skilled workforce, especially in fast-growing sectors like technology and hospitality where skills gaps are most pronounced.
  - A vibrant private sector supported by deeper reforms.
- Recommended reforms and actions:
  - Ensure workers have the right skills for emerging industries.
  - Steadfastly implement recently enacted laws that ease access for foreign investors to foster an investor-friendly environment and attract private investment.
  - Use the sovereign wealth fund as a catalyst to spur new projects and partnerships while leaving ample room for domestic and international private investors.

*IMF News — Saudi Arabia’s Path Forward Amid Lower Oil Prices (By Amine Mati and Yuan “Monica” Gao Rollinson, December 18, 2025).*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [SAUDI ARABIA AND THE IMF](https://www.imf.org/en/countries/sau)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2025/12/18/cf-saudi-arabias-path-forward-amid-lower-oil-prices_