Saudi Arabia’s Non-Oil Revenues Near Parity with Oil Income in Q2 2025

oil revenues surged 6.6 percent in the second quarter of 2025 compared with the same period last year, reaching SR149.86 billion ($39.96 billion), according to the Ministry of Finance’s quarterly budget performance report.

The increase marks a significant milestone in the Kingdom’s fiscal transformation, with non-oil income now making up 49.7 percent of total government revenue—up from less than 40 percent a year earlier. The rise comes as oil revenues fell 28.76 percent year-on-year to SR151.73 billion, pulling overall government revenue down 15 percent to SR301.6 billion.

Officials attribute the shift to two main factors: the government’s economic diversification strategy under Vision 2030 and the impact of voluntary oil production cuts agreed under the OPEC+ framework in late 2023. These cuts, initially 1 million barrels per day, have been reduced in stages this year, with output expected to return to pre-cut levels by September—earlier than planned.

The largest single contributor to non-oil revenue in the quarter was taxes on goods and services, generating SR74.95 billion and accounting for half of total non-oil income. Other significant sources included “other revenues” such as central bank earnings, port service charges, and administrative fees, which brought in SR28.9 billion, and corporate zakat totaling SR26 billion. Income, profit, and capital gains taxes contributed SR13.73 billion, while taxes on international trade and transactions reached SR6.32 billion.

The non-oil sector’s strong performance has been underpinned by growth in wholesale and retail trade, hospitality, transport, communications, and financial services. The General Authority for Statistics reported that Saudi GDP grew 3.4 percent year-on-year in the first quarter, with non-oil activities expanding 4.9 percent despite a slight contraction in oil-related activities.

On the spending side, government expenditures in Q2 totaled SR336.13 billion, down 8.9 percent from last year. The largest share went to employee compensation at SR140.40 billion, followed by goods and services at SR73.58 billion. Capital spending dropped sharply to SR39.9 billion.

The quarter closed with a budget deficit of SR34.53 billion—41 percent lower than Q1 but more than double the deficit recorded a year earlier—reflecting higher mid-cycle spending on Vision 2030 projects. Public debt stood at SR1.39 trillion, with around 63 percent domestic and 37 percent external.

With non-oil revenues nearing parity with oil income, Saudi Arabia’s fiscal position is becoming less vulnerable to energy market volatility. The IMF expects the Kingdom’s non-oil economy to grow 3.4 percent this year, supported by tourism, logistics, finance, and manufacturing expansion, even as oil prices remain softer.