Samer Choucair: Saudi Arabia’s SAR 759.8 Billion H1 Spending Reveals a New Map of Investment Opportunities
Investment leader Samer Choucair said that the health and social development sector’s position at the top of Saudi Arabia’s government spending during the second quarter of 2026 reflects a structural shift in the government’s approach to capital allocation. He noted that spending on healthcare and education is no longer merely operational expenditure, but has become part of a broader strategy to build human capital, support productivity, and drive non-oil growth.
Choucair explained that health and social development accounted for approximately 24% of total spending in the second quarter, ahead of general items, defense, and education. He said this clearly signals the continued prioritization of investment in people within the framework of Saudi Vision 2030.
He added that this spending pattern comes as the Saudi budget maintains a relatively limited deficit while both oil and non-oil revenues continue to grow, reflecting a fiscal policy that seeks to balance operational and investment spending while preserving the capacity to finance long-term projects.
SAR 338.8 Billion in Second-Quarter Revenue
Saudi Arabia’s budget recorded total revenue of SAR 338.8 billion in the second quarter of 2026, an increase of 12% year over year.
The growth was driven by a 22% increase in oil revenues to SAR 185.1 billion, while non-oil revenues reached SAR 153.7 billion, accounting for approximately 45% of total revenue.
Meanwhile, expenditures increased by 11% to SAR 373.1 billion, the highest second-quarter level in the available data.
This resulted in a deficit of approximately SAR 34.3 billion, the lowest quarterly deficit since the third quarter of 2024.
Samer Choucair said the combination of rising revenues and higher spending, while keeping the deficit at relatively contained levels, demonstrates the continued ability of fiscal policy to finance strategic priorities without abandoning fiscal discipline.
SAR 160 Billion Deficit in the First Half
During the first half of 2026, total government expenditure reached SAR 759.8 billion, an increase of 15%, while the cumulative deficit stood at approximately SAR 160 billion.
Choucair explained that the deficit was fully financed through debt, without drawing on reserves, which he said carries an important implication for institutional investors regarding the way public finances are being managed.
He noted that continuing to finance the deficit through debt instruments while preserving reserves gives the government greater flexibility in managing liquidity and directing spending toward strategic priorities, while avoiding the depletion of one of its key sources of financial resilience.
Health and Social Development Lead Spending
Sectoral spending data showed a clear priority for health and social development, which led expenditure at approximately SAR 89.8 billion in the second quarter, representing nearly one-quarter of total spending.
Spending on the sector reached SAR 170.6 billion during the first half, up 10% and equivalent to approximately 66% of its annual allocation.
Choucair said these figures reflect a shift in the way social spending is viewed, with healthcare and social services increasingly becoming part of the economic infrastructure that supports human-capital quality and sustainable growth.
Education, Defense and Economic Resources
Education also ranked among the leading sectors, with quarterly spending of approximately SAR 53 billion and first-half spending of SAR 109.7 billion, an increase of 5%.
Defense spending reached approximately SAR 60 billion in the second quarter, bringing first-half expenditure to SAR 124.6 billion, up 12%.
At the same time, spending on economic resources increased by 24% during the first half to SAR 56.5 billion, while municipal services, basic infrastructure, and transportation recorded notable increases supporting project execution.
Samer Choucair said the distribution of spending across these sectors reflects an effort to balance stability and public-service requirements with the financing of economic transformation and infrastructure projects.
Employee Compensation Accounts for 39%
By economic classification, employee compensation represented the largest component of spending, accounting for approximately 39%, or SAR 144.4 billion, in the second quarter, an increase of 3%.
Goods and services followed at approximately SAR 74 billion. Capital spending on non-financial assets increased by 16% to SAR 46.2 billion, while social benefits reached SAR 42.5 billion, up 8%.
Choucair said this structure demonstrates a balance between maintaining government operational efficiency and directing resources toward productive assets and long-term investment.
Healthcare and Education as Investments in Productivity
Samer Choucair explained that the government is not treating healthcare and education solely as consumption-related expenditures, but as direct investments in the future productivity of the workforce.
He added that institutional investors reading these figures can see human capital becoming one of the key drivers of non-oil growth, opening investment opportunities in healthcare services, private education, and related technologies.
Choucair noted that increased spending in these sectors benefits not only direct service providers, but also health-tech companies, digital education providers, healthcare infrastructure, supply chains, and supporting services.
Capital Spending Supports Vision 2030 Projects
Samer Choucair linked the increase in capital expenditure to the continued development of major projects associated with Vision 2030, noting that such spending supports supply chains, logistics infrastructure, and energy.
He explained that capital expenditure increased by 32% during the first half to approximately SAR 90 billion, saying this represents more than simply the construction of roads and facilities. It also signals continued demand for private financing and public-private partnerships.
Choucair emphasized that sovereign wealth funds and asset managers focused on infrastructure and healthcare can view these figures as direct support for their long-term investment theses.
New Opportunities for Institutional Capital
Samer Choucair said continued government capital expenditure is creating a clearer environment for investors seeking projects with long-term cash flows.
He noted that sovereign wealth funds, asset managers, and private equity funds could find opportunities across infrastructure, healthcare, education, logistics, and energy, particularly as projects linked to economic diversification continue to advance.
He added that increased government spending in these areas can generate multiplier effects by stimulating private investment and increasing demand for services, financing, equipment, and technology.
Public Debt Reaches SAR 1.68 Trillion
From a financial-markets perspective, Samer Choucair said the current spending pattern supports relatively stable expectations surrounding public debt, which reached approximately SAR 1.68 trillion at the end of the first half of 2026.
He noted that financing the deficit through borrowing rather than drawing down reserves preserves a degree of flexibility in fiscal-policy management.
Choucair added that this approach could help limit pressure on domestic interest rates, particularly in a global environment characterized by diverging central-bank policies.
Non-Oil Revenues Strengthen the Diversification Narrative
Samer Choucair emphasized that non-oil revenues accounting for 45% of total revenue in the second quarter is an important indicator when assessing the trajectory of the Saudi economy.
He explained that the growth of non-oil revenues strengthens the economic-diversification narrative and gradually reduces reliance on oil revenues as the sole source of government financing.
“This trend could support the attractiveness of Saudi sovereign debt instruments while also strengthening foreign direct investment flows into sectors prioritized under the Kingdom’s economic transformation programs,” Choucair said.
Repricing Opportunity Risk
In his strategic assessment, Samer Choucair said: “What is happening is a repricing of opportunity risk. When the government allocates nearly one-quarter of its quarterly budget to health and social development, it sends a clear signal that social sustainability is an integral part of economic stability.”
He added that investors focused solely on oil or defense spending while overlooking investment in human capital could miss a significant portion of the opportunities emerging across the Saudi economy.
Choucair explained that understanding government-spending trends has become essential for institutional investors because these trends reveal which sectors are likely to receive sustained demand from both the government and private sector in the coming years.
PIF and the Digital Economy
Over the medium term, Samer Choucair expects this direction to continue supporting the growth of non-oil sectors, particularly as projects led by the Public Investment Fund and initiatives related to the digital economy and healthcare advance.
He said this could translate into opportunities in Tadawul-listed companies linked to healthcare, education, and infrastructure, as well as project-related debt instruments and private-equity funds targeting priority sectors.
Choucair added that investors will continue to monitor whether companies benefiting from government spending can convert demand into sustainable cash flows rather than relying solely on nominal revenue growth.
Rising Financing Costs Require More Precise Debt Management
Samer Choucair noted that a 41% increase in financing expenses during the second quarter is a reminder of the importance of efficient debt management as deficits continue.
He explained that higher financing costs do not undermine the strength of the fiscal position, but they require policymakers and investors to continuously monitor the structure and maturity profile of debt as well as borrowing costs.
“The balance between financing projects and maintaining debt sustainability will become one of the key factors in assessing Saudi fiscal policy over the coming years,” Choucair said.
Healthcare and Education as Long-Term Investment Opportunities
Samer Choucair said the leading position of health and social development spending carries particular significance for investors seeking defensive sectors with long-term demand.
He explained that higher government spending could support the expansion of healthcare services, medical infrastructure, health technology, specialized education, and digital solutions that improve service-delivery efficiency.
Choucair added that institutional investors can benefit from these trends by building balanced exposure to companies and projects directly linked to government spending, as well as those benefiting indirectly from higher productivity and income.
The Broader Capital-Allocation Message
In his concluding assessment, Samer Choucair emphasized that the clearest message from Saudi Arabia’s 2026 budget is not the size of spending alone, but how that spending is being allocated.
“Saudi Arabia’s 2026 budget is not choosing between operations and investment; it is integrating the two. This integration makes the economy more capable of absorbing external shocks and gives institutional capital a clearer foundation for its allocations across the region,” Choucair said.
He added that the continued implementation of Vision 2030 makes quarterly fiscal indicators an important tool for understanding government-demand trends and identifying sectors that could experience sustainable growth in the years ahead.
Capital Allocation Enters a New Phase
Samer Choucair concluded that Saudi Arabia’s fiscal trajectory in the second quarter of 2026 offers institutional investors a picture of an economy moving along two parallel tracks: maintaining operational efficiency and financial stability while increasing investment in human capital and productive assets.
He noted that the combination of rising oil and non-oil revenues, continued capital spending, and deficit financing through debt without drawing on reserves reflects an effort to preserve fiscal flexibility while advancing diversification projects.
According to Choucair, sectors linked to healthcare, education, infrastructure, the digital economy, energy, and logistics will remain among the areas most deserving of attention from sovereign wealth funds, asset managers, and long-term investors as Saudi Arabia continues to reshape its economy under the objectives of Vision 2030.