Saudi economy in good shape to achieve government's 2021 goals: Aljazira Cap

Aljazira Capital believes that Saudi Arabia’s economic goals for 2021 are realistic and the economy is well placed to achieve these targets, it said in a recent report.

The Kingdom's ability to adopt appropriate policies to achieve a balance between growth, economic stability, and financial sustainability has stimulated economic recovery and reduced the fiscal deficit.

Saudi Arabia’s target to increase revenue by 10.3% year-on-year (YoY) to SAR 849 billion seems realistic with the expected increase in oil prices, it added.

Additionally, the faster than expected recovery in demand amid COVID-19 vaccine rollouts globally, the significant commitment to production cuts by OPEC+ members, and their agreement to extend output cuts strongly provide upside risk to the Kingdom’s oil revenue, it clarified.

The Saudi government is planning a significant reduction in the fiscal deficit for 2021, with the support of oil prices breaking the $50 barrier per barrel by the end of 2020 and optimism for economic recovery following the Saudi Food and Drug Authority’s (SFDA) approval on COVID-19 vaccine, and increasing the value-added tax rate to support revenue growth.

Aljazira Capital indicated that the continued focus on the initiatives of the Kingdom's Vision 2030 amid higher participation of the private sector will boost the economic activities and the cooperation between them.

It expects a 47.7% YoY rise in tax revenues on goods and services in 2021 to SAR 209 billion, as a result of the higher impact of value-added tax (VAT) for the whole year.

According to the data compiled by Argaam, the Ministry of Finance announced last week the state budget for 2021 and the general budget for 2020.

The ministry estimated public revenue in 2021 budget at SAR 849 billion, and expenditures at SAR 990 billion, with an expected deficit of SAR 141 billion.