Saudi structural reforms to continue: Al-Jadaan

Minister of Finance, Mohammed Al-Jadaan

The Saudi government will continue implementing fiscal and economic structural reforms to help develop and diversify the Saudi economy, and to increase economic growth while maintaining fiscal sustainability, which will be achieved by continued implementation of Saudi Vision 2030 initiatives and strategies, Minister of Finance, Mohammed Al-Jadaan, affirmed.

Saudi Vision 2030 will help to develop promising economic sectors, enhance investment attractions, stimulate industrial growth, and raise the percentage of local content and Saudi non-oil exports.

The Minister also highlighted the important role of the Public Investment Fund and development funds, in addition to the continued implementation of structural reforms that enhance the growth of non-oil GDP at high and sustainable rates in the medium-term.

He also added that, despite the crises the world is facing—such as a slowdown in the global economy caused by the COVID-19 pandemic, and geopolitical tensions that have negatively affected global supply chains—the Kingdom's economy is in a resilient fiscal position, with fiscal space represented by strong government reserves and sustainable levels of public debt that can accommodate any crises that may occur in the future. In addition, the agile nature of additional spending allows the Kingdom to have control in the medium-term, allowing an extension of implementation periods for projects and strategies, the Minister said. Further positive growth rates in numerous economic activities are also expected during FY 2024 and in the medium-term. His Excellency noted that that the growth rates are a result of many structural reforms and sectoral strategies within Saudi Vision 2030.

In addition, he emphasized that the government attaches great importance to strengthening the social protection system to protect citizens from global economic shocks.

The positive forecast for the Saudi economy for FY 2024 is an extension to its performance since FY 2021, where the preliminary forecasts for economic growth rate for 2024 and the medium-term were revised, indicating a real GDP growth of 4.4% for 2024. This is supported by the growth of non-oil activities with the expectation that the private sector will continue to drive economic growth in the economy, contribute to job creation, and improve trade balances. The government and its private sector partners will continue to implement Saudi Vision 2030 programs and initiatives, sectoral and regional strategies and giga projects, and other economic activities to achieve positive growth rates during 2024 and in the medium-term.

The Kingdom's growing economy would boost revenue in the medium-term. He noted that the economic reforms come under the Fiscal Sustainability Program as it focuses on development of medium-term fiscal planning process, with a view to sustaining and stabilizing public finances, while maintaining economic growth rates by diversifying revenue sources, increasing expenditure efficiency, and stimulating private sector growth.

According to the pre-budget statement, total revenues for 2024 are estimated to be SAR 1.17 trillion, reaching SAR 1.25 trillion in 2026. Total expenditures are estimated to be SAR 1.25 trillion in 2024, reaching SAR 1.36 trillion in 2026. His Excellency also noted that the government's 2024 budget is estimated to have modest deficits of 1.9% of GDP, reflecting the efforts to stabilize government revenues and the continuous investments to support a sustainable economic growth. ​

Al-Jadaan added that the government will follow its approved annual borrowing plan to finance the expected budget deficit and pay the principal debt due in 2024. In addition, the government will continue to search for available opportunities after considering the market conditions to finance strategic capital projects and infrastructure, seeking to diversify financing channels, to maintain capital efficiency and deepen debt markets. It is expected that the size of the public debt portfolio will increase as a result of the expansion in spending. This is to accelerate the implementation of some social and economic programs and projects to achieve Saudi Vision 2030 goals.