Saudi Arabia’s 2026 Budget: What it Means for the Construction and Infrastructure Sector

Saudi Arabia’s Crown Prince Mohammed bin Salman has approved the Kingdom’s 2026 budget, setting total expenditure at SAR 1.313 trillion (USD 350 billion) and estimated revenues at SAR 1.147 trillion (USD 306 billion).

Since the launch of Saudi Vision 2030 in 2016, a strategic plan to diversify the economy, reduce dependence on oil and transform Saudi Arabia into a global hub for investment and innovation, the Saudi economy has undergone a significant transformation. This has been driven by structural, financial and economic reforms alongside strategic spending directed toward national priorities.

The 2026 budget reflects a deliberate strategy to advance Vision 2030’s diversification goals. While the budget projects a SAR 166 billion deficit, this shortfall is intentional, stemming from significant investments in non-oil sectors such as infrastructure, transportation, tourism, and giga-projects.  These allocations, including SAR 162 billion (USD 43 billion) in capital expenditure, demonstrate the Kingdom’s commitment to building a modern economy that reduces reliance on oil revenues and fosters sustainable growth.

SAR 35 billion (USD 9.31 billion), around 3% of the total budget, is specifically earmarked for infrastructure like roads, ports, airports, logistics systems and digital innovations.This is where a lot of opportunities will be, according to those we are speaking to within the giga companies. Other sectors will continue to generate substantial opportunities for construction and infrastructure players, with approximately 80% of the budget directed toward sectors such as healthcare (SAR 260 billion), education (SAR 201–202 billion), defence (SAR 240 billion) and tourism (SAR 351 billion).

With significant allocations for urban development, transportation networks and smart city initiatives, developers and contractors can expect a robust pipeline of projects and increased tender activity.  Consultants will play a critical role in delivering design, engineering and compliance expertise as the Kingdom accelerates its Vision 2030 goals.

However, these opportunities are likely to come with complexity:

• We anticipate that not all projects that are tendered will proceed, or proceed on the basis originally intended, given the ongoing reprioritisation of where funds are spent. We are already seeing contract terms which allow for significant descoping or termination for convenience.
• The broader fiscal deficit may result in greater reliance on Public-Private Partnerships (PPPs) and alternative financing models, introducing intricate contractual frameworks that demand strong legal oversight.
• As projects scale, regulatory compliance, risk allocation and dispute resolution may become more challenging, while sustainability mandates add another layer of responsibility.
• Beyond Saudi Arabia, this infrastructure push is expected to influence investment trends across the GCC, creating cross-border prospects for firms operating world-wide.

As Saudi Arabia moves forward with its ambitious development agenda, legal preparedness will be critical for stakeholders in the construction and infrastructure sectors. From structuring PPP agreements to navigating procurement regulations and managing disputes, the complexity of these projects requires expert guidance. Firms that combine technical capability with strong contractual and compliance strategies will be best positioned to capitalise on the opportunities created by the 2026 budget and Vision 2030’s vision.

If you have any questions regarding the information discussed in this article, please contact Claire Miller and Natalie Ledger.