IMF Staff Completes 2026 Article IV Mission to Saudi Arabia

IMF News, June 3, 2026

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The Saudi economy is proving resilient in the face of the war in the Middle East thanks to strong fundamentals and diversified logistical and oil infrastructure.
The war has nonetheless disrupted its momentum, curtailing oil exports and weighing on non-oil activity and confidence.
The geopolitical situation remains fluid, with uncertainty closely tied to the duration of disruptions.
The mission supports the authorities’ efforts to contain the impact of the conflict, including operational and regulatory measures to facilitate the rerouting of shipments.
The mission will submit a report to the IMF Executive Board for discussion in July 2026.

IMF staff team led by Mr. Azim Sadikov visited Riyadh from April 28 to May 13, 2026 to conduct discussions for the 2026 Article IV consultation.
At the conclusion of the visit, Mr. Sadikov issued the mission statement summarizing preliminary findings.

GDP expanded by 4.5 percent in 2025, supported by the unwinding of OPEC+ production cuts and robust non-oil activity driven by domestic demand.
Labor market conditions remained favorable.
Inflation eased to below 2 percent in 2025.
High-frequency indicators point to some stabilization in non-oil activity in April following a likely contraction in March.
Saudi Arabia's buffers: low government debt, ample reserves, and a large sovereign wealth fund.

Assuming maritime shipments through the Strait of Hormuz normalize in the coming months:
- Growth this year is expected to be notably lower but holding up at about 2 percent.
- Average inflation is projected to increase to about 2.3 percent as higher shipping and insurance costs add upward pressure on prices.
- Higher oil prices are expected to offset volume losses, generating a windfall that would reduce the current account and fiscal deficits in 2026.
Non-oil activity would be supported by domestic demand, underpinned by stable public employment, government spending, and the steady execution of private and public capital projects.

Main risk: escalation of the conflict, which could further impair shipping routes, damage energy infrastructure with associated output losses, and heighten uncertainty and financial sector risks.
A prolonged and intensified conflict could weigh on medium-term growth and investment prospects, erode investor confidence, and weaken diversification prospects.

Given the economy’s resilience so far, the mission considers that a modest reduction in the non-oil primary deficit in 2026 remains appropriate.
Spending reprioritization should be the first line of action to accommodate any fiscal response to the conflict.
Should the shock prove more prolonged, Saudi Arabia has the space to loosen the fiscal stance to cushion the economy, with support to affected businesses and households that should be temporary, targeted, and transparent.
As the economy normalizes, an ambitious medium-term fiscal consolidation supported by reforms to strengthen fiscal frameworks will be needed to boost savings for future generations, anchored on non-oil revenue mobilization and spending rationalization, including through the completion of an energy subsidy reform while protecting the vulnerable.

The peg to the U.S. dollar provides a credible monetary policy anchor and helps underpin financial stability.
The banking sector is well-positioned to weather the shock, supported by strong capital and liquidity buffers.
The mission welcomes SAMA’s efforts to step up the monitoring of liquidity, credit conditions, and asset quality.
The mission supports SAMA’s decision to proceed with the implementation of the 100 basis points countercyclical capital buffer, its proactive approach to containing risks from FX borrowing, and continued progress in strengthening its resolution and emergency liquidity assistance frameworks.

Ten years since its launch, Vision 2030 reforms have helped strengthen institutions and improve policymaking, boosting economic performance and reducing dependence on oil.
Sustaining the reform momentum is necessary to remove remaining impediments to diversification and to expand the role of the private sector.
The PIF's recalibrated 2026–30 strategy, with its shift toward more selective capital allocation and greater private-sector crowding-in, is a welcome development.
Identified reform priorities:
- Improving the business environment
- Deepening capital markets
- Supporting small and medium enterprises
- Aligning education with labor market needs
- Strengthening governance
- Scaling AI adoption while mitigating associated risks

IMF Communications Department — End-of-Mission press release, June 3, 2026.