IMF Executive Board Concludes 2026 Article IV Consultation with Saudi Arabia

IMF News, July 29, 2026

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Saudi Arabia's economy has proven resilient in the face of the war in the Middle East, supported by strong fundamentals, diversified oil and logistics infrastructure, and authorities' efforts to ease bottlenecks.
The war disrupted trade, including oil exports, and weighed on non-oil activity and confidence.
Rerouting oil through the East-West pipeline to Red Sea ports limited the drop in oil deliveries, while higher oil prices have more than offset volume losses, generating an oil revenue windfall.
High-frequency indicators point to early stabilization in non-oil activity in April–June, after a likely contraction in March.
The Saudi economy entered 2026 with strong momentum: GDP expanded by 4.6 percent in 2025, inflation eased to below 2 percent, unemployment among Saudis remained at low levels, foreign reserves remained comfortable, and the banking sector maintained strong buffers.

Baseline projections:
- Real GDP growth: 4.6 (2025), 1.7 (2026), 5.5 (2027)
- Non-oil GDP growth: 4.2 (2025), 2.6 (2026), 4.5 (2027)
- CPI Inflation (avg, %): 2.0 (2025), 2.2 (2026), 2.1 (2027)
- Current account (% GDP): -2.6 (2025), -0.3 (2026), -0.8 (2027)
The outlook remains highly uncertain, with downside risks including:
- Continued disruptions to shipping through the Strait of Hormuz further curtailing trade and weakening confidence.
- Global developments: weaker demand, trade tensions, tighter financial conditions, and a sustained decline in oil prices.
Upside factors include faster normalization of maritime traffic, higher oil prices or production, and stronger implementation of productivity-enhancing reforms.
A gradual recovery is expected once maritime traffic through the Strait returns to normal; growth is projected to slow to 1.7 percent in 2026, with non-oil growth easing to 2.6 percent. Inflation is projected to rise modestly to 2.2 percent in 2026.

Higher oil revenues are expected to narrow the current account and fiscal deficits in 2026.
Fiscal stance and public finances (selected projections):
- Revenue (% GDP): 23.3 (2025), 23.5 (2026), 24.1 (2027)
- Expenditure (% GDP): 29.1 (2025), 27.2 (2026), 27.1 (2027)
- Fiscal balance (% GDP): -5.8 (2025), -3.7 (2026), -3.1 (2027)
- Public debt (% GDP): 31.8 (2025), 32.1 (2026), 34.4 (2027)
- Non-oil primary balance (% non-oil GDP): -23.3 (2025), -22.2 (2026), -20.9 (2027)
Monetary and external indicators:
- Broad money (% change): 8.4 (2025), 5.2 (2026), 7.6 (2027)
- Credit to the private sector (% change): 10.2 (2025), 5.8 (2026)
- Reserves (months imports): 13.7 (2025), 13.9 (2026), 14.1 (2027)
- External debt (% GDP): 37.6 (2025), 38.0 (2026), 40.5 (2027)
- REER (% change): -3.9 (2025), -2.9 (2026)
Current assessment: the currency peg to the U.S. dollar remains appropriate; the Saudi Central Bank’s liquidity management is prudent; the banking sector has strong capital and liquidity buffers.

Near-term:
- Preserve macroeconomic stability and contain the impact of the shock.
- Adopt a modest reduction in the non-oil primary deficit in 2026, with any fiscal support targeted, temporary, and transparent.
- Accommodate any fiscal response through spending reprioritization; maintain policy flexibility and safeguard buffers.
- Update contingency plans to preserve confidence.
Medium-term:
- Pursue fiscal consolidation and Vision 2030 reforms to sustain growth and diversification and ensure adequate savings for future generations.
- Emphasize non-oil revenue mobilization, expenditure rationalization, improved public investment management, energy subsidy reform, and strengthening of fiscal institutions and frameworks.
- Continue reforms to deepen diversification, improve the business environment, develop capital markets, enhance human capital and labor market outcomes, strengthen governance and transparency, and advance digitalization.
- Recalibrate the PIF strategy toward more selective capital allocations and a greater private sector role to foster productivity.
- Encourage deeper GCC integration to enhance regional resilience.

Directors welcomed Saudi Arabia’s resilience amid the war and associated disruptions, attributing it to Vision 2030–anchored policies, ample fiscal and external buffers, diversified energy and logistics infrastructure, and effective crisis management.
Directors commended authorities’ efforts to support trade rerouting and the steady reform progress that strengthened institutions and preserved macroeconomic and financial stability.
Directors viewed the non-fiscal measures taken so far as appropriate and judged that Saudi Arabia has fiscal space to ease its stance if the shock proves more pronounced.
Directors welcomed progress on the 2024 FSAP recommendations, including activation of the countercyclical capital buffer and advances in crisis preparedness, and encouraged vigilance on FX funding risks, sovereign-bank linkages, and exposures to large projects.
Directors commended Vision 2030’s 10-year progress in strengthening the non-oil economy, expanding the role of the private sector, advancing diversification, and delivering labor market gains, including higher female labor force participation.

Population: 35.3 million (2024)
Quota: SDR 9,992.6 million (2.10% of total)
Main products and exports: Oil and oil products (69%)
Key export markets: Asia, U.S., and Europe
Output and prices:
- Real GDP growth (%): 4.6 (2025), 1.7 (2026), 5.5 (2027)
- Non-oil GDP growth (%): 4.2 (2025), 2.6 (2026), 4.5 (2027)
- CPI Inflation (avg, %): 2.0 (2025), 2.2 (2026), 2.1 (2027)
Central government finances:
- Revenue (% GDP): 23.3 (2025), 23.5 (2026), 24.1 (2027)
- Expenditure (% GDP): 29.1 (2025), 27.2 (2026), 27.1 (2027)
- Fiscal balance (% GDP): -5.8 (2025), -3.7 (2026), -3.1 (2027)
- Public debt (% GDP): 31.8 (2025), 32.1 (2026), 34.4 (2027)
- Non-oil primary balance (% non-oil GDP): -23.3 (2025), -22.2 (2026), -20.9 (2027)
Money and credit:
- Broad money (% change): 8.4 (2025), 5.2 (2026), 7.6 (2027)
- Credit to the private sector (% change): 10.2 (2025), 5.8 (2026)
Balance of payments:
- Current account (% GDP): -2.6 (2025), -0.3 (2026), -0.8 (2027)
- FDI (% GDP): 1.5
- Reserves (months imports): 13.7 (2025), 13.9 (2026), 14.1 (2027)
- External debt (% GDP): 37.6 (2025), 38.0 (2026), 40.5 (2027)
Exchange rate:
- REER (% change): -3.9 (2025), -2.9 (2026)
Unemployment rate:
- Overall (% total labor force): 3.2
- Nationals (% total labor force): 7.0

Article IV consultation concluded by the IMF Executive Board on July 22, 2026.