Al-Jadaan says 2022 budget reflects gov't keenness to boost post-pandemic economic growth

Saudi Minister of Finance Mohammed Al-Jadaan 

Saudi Minister of Finance Mohammed Al-Jadaan said 2022 budget reflects the Kingdom's keenness to boost the economic growth in post-COVID 19 period.

He added that the budget also mirrors the government's keenness to use the financial resources to spend on health, education, and development of basic services, in addition to continuing support and social subsidies.

In his speech on the occasion of announcing 2022 budget, Al-Jadaan indicated that the budget is a continuation of the reforms that support the development of the public financial management and commitment to maintaining the previously-announced spending ceilings.

This aims to ensure financial sustainability and a strong financial position in the medium term, which enable the state to confront any emergency variables and absorb unexpected economic shocks, the minister said.

He stressed that the realistic and responsible policies and measures taken by the government to deal with COVID-19 limited the humanitarian, financial and economic repercussions through providing strong support to the health and private sectors while maintaining financial sustainability for the medium and long term.

These policies reflected positively on the gradual recovery of the local economy, which witnessed accelerated growth in some economic activities.

The surplus of 2022 budget will be directed to strengthening the government reserves, supporting development funds and the Public Investment Fund (PIF), as well as considering the possibility of accelerating the implementation of some strategic programs and projects that have economic and social dimensions. The surplus may also be used to repay part of the public debt according to the market conditions.

As for the public debt, Al-Jadaan said its indicators are expected to improve in 2022 to decrease to nearly 25.9% of gross domestic product (GDP) compared to 29.2% in 2021.

This is due to forecasts of achieving budget surplus as well as GDP growth. However, the government would borrow to repay the principal debt when it matures and take advantage of the favorable opportunities in the market. It also aims to support reserves or finance capital projects that can be accelerated through annual issuances.

The debt-to-GDP ratio will likely remain at appropriate levels to hit 25.4% in 2024, the minister said.

He noted that the government is working to develop a risk management framework to follow up and monitor the most prominent developments in the local and global economies, as well as identify the relevant risks, and then assess their implications.

The government seeks to support the economic recovery in 2022 and in the medium term, while preserving the initiatives that were launched over the past years and committing to achieving the goals of Vision 2030 through reducing dependence on oil revenues, diversifying the economic resources, developing non-oil revenues and ensuring their sustainability.

The minister highlighted the recent progress in implementing the vision programs and major projects, as well as other investment projects in various sectors, including infrastructure.

The Kingdom's economy is witnessing continuous growth in terms of economic enablers that support the private sector. Such enablers include the effective development contribution of projects and programs carried out by the Public Investment Fund and the National Development Fund. They also include the progress in implementing the National Industrial Development Program and Logistics Services (NIDLP), the National Investment Strategy, the Shareek Program, the Financial Sector Development Program, and the Privatization Program.

The success of such enablers is positively reflected on the public finance through stimulating and diversifying economic growth, and thus improving non-oil revenues, the minister said.

He concluded that this success also limits pressure on government spending, especially as the private sector leads investment and employment