IMF Backs Saudi Riyal Peg, Sees 1.7% Growth in 2026

The board commended substantial progress under Vision 2030 over the past decade, noting it strengthened the non-oil economy, expanded the private sector’s role, and delivered measurable labour market improvements including higher female participation. Directors said the reform agenda offers lessons for other countries and for the IMF’s engagement with member states.

Directors also welcomed the Public Investment Fund’s recalibrated strategy toward more selective capital allocation and a greater role for private-sector productivity. They highlighted the benefits of deeper GCC integration in strengthening regional resilience.

The IMF’s explicit backing of the peg removes near-term speculation about a devaluation that had surfaced briefly during Red Sea shipping disruptions. The riyal’s stability supports the broader GCC currency regime and keeps Saudi sovereign credit spreads anchored. For oil markets, the endorsement of the East-West Pipeline as a diversification tool underscores the kingdom’s ability to bypass Strait of Hormuz chokepoints.

Directors stressed that as conditions normalise, ambitious fiscal consolidation will be needed to ensure adequate savings for future generations. They highlighted mobilising non-oil revenue, rationalising expenditure, improving public investment management, and reforming energy subsidies. The board said Saudi Arabia has sufficient fiscal space to ease its stance if the shock intensifies.

The board commended Saudi Arabia’s leadership in multilateral forums, including the G20 and the chair of the International Monetary and Financial Committee. The next scheduled data point for the Saudi economy is the Q3 2025 GDP flash estimate, due in late October.