Al-Jadaan says IMF statement highlights positive prospects of Saudi economy

Mohammed Al-Jadaan, Minister of Finance

Saudi Minister of Finance, Mohammed Al-Jadaan, said that the International Monetary Fund’s (IMF) statement highlighted the current indicators and positive future prospects for the Saudi economy.

The Kingdom’s economy has overcome many oobstacles and challenges confronting the global economy over the last two years while maintaining financial sustainability, enhancing the Saudi economy's solidity and strength.

Al-Jadaan also affirmed the importance of the Kingdom's economic and structural changes under Vision 2030, as well as their contribution to attaining sustainable and inclusive economic growth.

He welcomed the IMF staff' praise of the Kingdom's efforts to mitigate the economic, social and health effects of the COVID-19 pandemic, stressing that the country is currently experiencing a strong recovery following the pandemic-induced recession, and that rising oil prices provide an opportunity to accelerate the pace of reforms being implemented under the Saudi Vision 2030.

According to the statement, the IMF anticipated the Kingdom's GDP to rise by 7.6% in 2022, the non-oil sector to grow by roughly 4.2%, the current account surplus to climb to 17.2% of GDP, and overall inflation to remain at an average of 2.8%.

The Kingdom successfully dealt with the COVID-19 pandemic, the statement noted, emphasizing that Saudi Arabia is in a position to overcome the risks posed by the Ukrainian crisis and the tightening monetary policy cycle in developed economies.

The impact of tightening global conditions on the Kingdom's economy is limited due to the banking sector's high levels of liquidity and capitalization. Economic activity is also improving significantly, aided by increased oil prices and government reforms implemented in accordance with Vision 2030, it added.

The statement noted that the Kingdom's unemployment rate fell to 10.1% in the first quarter of 2022 as a result of the high rates of employment of Saudi citizens in the private sector, while praising the effective initiatives to increase women's participation in the workforce, which led to exceeding the Kingdom's Vision 2030 targets.

In terms of fiscal policy, the IMF mission applauded the Kingdom's commitment to ensuring the sustainability of public finances and efforts to avoid keeping up with economic cycle tendencies by establishing a spending cap unaffected by oil price variations. IMF staff also expected that public finances would outperform budget forecasts in 2022, and that the debt-to-GDP ratio would decline.

The mission also emphasized that financial stability risks are well contained, as levels of profitability, liquidity, and capitalization are good at the banking system level, and that the impact of further tightening of global monetary policy conditions will be limited on credit growth and non-oil GDP, but positive on banking sector profitability.

The IMF staff's final statement welcomed Saudi Arabia’s efforts regarding climate policies, stressing that the government is working to intensify investments in the production of blue and green hydrogen, in addition to its continuous efforts in research and development with a focus on the circular carbon economy.