Saudi Arabia will continue to implement initiatives, reforms to maintain fiscal sustainability: Al-Jadaan

Mohammed Al-Jadaan, Minister of Finance

Saudi Arabia’s Finance Minister Mohammed Al-Jadaan said the government will continue during 2022 to implement initiatives and reforms announced during the past years to complement the economic and fiscal reforms process undertaken to contribute towards realizing Vision 2030 objectives.

He added that this is in tandem with supporting the continued implementation of economic transformation plans and funding social-related expenses.

Commenting on pre-budget statement, he explained that work is underway to set a strategy for the support and social benefits ecosystem under the umbrella of the Council of Economic and Development Affairs (CEDA).

The strategy operates under two main parallel tracks, one of which focuses on the developing policies while other track focuses on the budget to ensure better targeting mechanism. Both tracks will assure achieving the strategic objectives out of this ecosystem.

He pointed out that despite the continuation of the COVID-19 pandemic and its new variants that affect the economy, growth rates, and global demand, controlling the deficit rates in 2022’s general budget is going as planned.

Deficit is expected to reach about 1.6% of the gross domestic product (GDP), with an estimated amount of SAR 52 billion.

This deficit is estimated to decrease gradually in light of expectations of achieving budget surplus starting from 2023.

Initiatives to revitalize the economy and support the private sector contributed to the economy’s rapid response. In the first half of 2021, the non-oil GDP recorded a growth of 5.4%, supported by the 7.5% growth of the private sector’s GDP.

He explained that expectations indicate a real GDP growth of 2.6% in 2021, driven by a 4.2% growth in non-oil GDP.

The GDP for 2022 is projected to rise 7.5%, driven by the growth of both non-oil GDP and oil sector. The rise was attributed to expectations of raising the Kingdom’s share of oil production starting from May 2022 as per the OPEC + agreement, as well as recovery in global demand, and improvement of global supply chains.

Al-Jadaan forecasted that the GDP growth to continue in the medium term, driven by non-oil sector’s growth.

He stressed that the government's strategy is continuing to maintain financial sustainability and enhance the Kingdom’s financial position, as it aims to reach a total public debt of SAR 989 billion in 2022, or 31.3% of the GDP compared to about 30.2% in 2021, with flexibility in dealing with financing needs according to market developments.

It is also estimated that the debt-to-nominal GDP ratio will drop to 27.6% in 2024, with the expectation of stabilizing the debt volume in the medium term, in light of expectations of achieving budget surpluses, as of 2023.

In 2022, the privatization program aims to continue offering privatization opportunities and supporting partnership projects between the public and private sectors at the local and international levels in many sectors, most notably water, health, housing, and media.

The program also aims to boot the private sector’s contribution to the GDP from 40% to 65% by 2030, the Saudi minister highlighted.

The private sector is projected to continue to grow at a higher rate than before to lead economic growth and create jobs for all citizens.