RIYADH — Saudi Arabia recorded a SR34.3 billion ($9.1 billion) budget deficit in the second quarter of 2026 as government revenue rose 12% year-on-year, according to the Ministry of Finance's quarterly budget performance report released Thursday.Total revenue reached SR338.8 billion ($90.3 billion) during the quarter, while expenditure rose 11% from a year earlier to SR373.1 billion ($99.5 billion).Oil revenue increased 22% year-on-year to SR185.1 billion ($49.4 billion), up from SR151.7 billion in the second quarter of 2025. Non-oil revenue also grew 3% to SR153.7 billion ($41 billion).The second-quarter performance lifted total government revenue for the first half of 2026 to SR599.8 billion ($159.9 billion), a 6% increase from the same period last year.Oil revenue accounted for SR329.8 billion ($88 billion) of first-half revenue, up 9% year-on-year, while non-oil revenue reached SR269.9 billion ($72 billion), an increase of 2%.Among non-oil revenue sources, taxes on goods and services rose 5% to SR154.1 billion ($41.1 billion), while taxes on income, profits and capital gains increased 2% to SR20.9 billion ($5.6 billion). Revenue from taxes on international trade and transactions declined 13% to SR10.3 billion ($2.8 billion).Government expenditure totaled SR759.8 billion ($202.6 billion) during the first half of the year, up 15% from the same period in 2025, resulting in a cumulative deficit of SR160 billion ($42.7 billion). The first-quarter deficit stood at SR125.7 billion ($33.5 billion).Capital spending on non-financial assets rose 16% in the second quarter to SR46.2 billion ($12.3 billion). Compensation for employees increased 3% to SR144.4 billion ($38.5 billion), while financing costs climbed 41% to SR16.8 billion ($4.5 billion). Social benefits rose 8% to SR42.5 billion ($11.3 billion).The report showed the government continued to prioritize spending on key sectors. Health and social development received SR170.6 billion ($45.5 billion) during the first half of the year, equivalent to 66% of its annual allocation. Military spending reached SR124.6 billion ($33.2 billion), while education expenditure totaled SR109.7 billion ($29.3 billion). Spending on economic resources increased 24% year-on-year to SR56.5 billion ($15.1 billion).The Ministry of Finance said the entire first-half deficit was financed through borrowing without drawing on government reserves. The state's general reserve stood at SR399.1 billion ($106.4 billion) at the end of June, while the current account balance totaled SR39.9 billion ($10.6 billion).Public debt rose to SR1.685 trillion ($449.3 billion) by the end of the first half of 2026, compared with SR1.519 trillion ($405.1 billion) at the beginning of the year. Of the total, SR1.06 trillion was domestic debt and SR624.9 billion was external debt.Saudi Arabia's 2026 state budget projects annual revenue of SR1.147 trillion ($306 billion), expenditure of SR1.313 trillion ($350.1 billion) and a fiscal deficit of SR165.4 billion ($44.1 billion).