|21 July, 2019

Saudi Arabia on track with its fiscal reform agenda, says IMF

Last week, the Kingdom approved the Government Tendering and Procurement law to improve the way it procures contracts and services

A participant stands near a logo of IMF at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018.

A participant stands near a logo of IMF at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018.

REUTERS/Johannes P. Christo

The International Monetary Fund (IMF) has encouraged the Saudi authorities to build on their fiscal reforms, including the continuation of the planned energy and water price reforms as well as increases in expatriate labour fees.

The Washington-based fund stated that continued commitment to prudent macroeconomic policies and appropriate prioritisation of reforms will be key to promoting non-oil growth, creating jobs for nationals and achieving the objectives of Vision 2030 agenda.

IMF expects Saudi Arabia’s real non-oil growth to strengthen to 2.9 per cent in 2019 as government spending and confidence increase, but real GDP growth is projected to slow to 1.9 per cent as real oil growth slows to 0.7 per cent with the implementation of the OPEC+ agreement. 

Additionally, the IMF projected the fiscal deficit to widen to 6.5 per cent of GDP in 2019 from 5.9 per cent in 2018 as the fund expects government spending to exceed the budgeted amount and offset an increase in non-oil revenues.

Saudi Arabia is on track with its reform agenda, the Kingdom is lowering the registration threshold for the value-added tax (VAT), adjusting gasoline prices on a quarterly basis as well as increasing fiscal transparency.

Similarly, reforms to the capital markets, legal framework as well as the business environment and SMEs sector are ongoing.

The Saudis are also strengthening their anti-money laundering (AML/CFT) framework, recently the Kingdom was admitted as a full member of the Financial Action Task Force.

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