Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan said that the Kingdom’s priority is to promote growth more than to increase non-oil revenues.
Al-Jadaan added, “Our priority is to promote growth more than to increase non-oil revenues, and some of the costs borne by the private sector will be reviewed.”
He pointed out that the realistic and responsible policies and measures taken by the government in dealing with the Corona Virus (Covid-19) pandemic limited the humanitarian, financial and economic repercussions by providing strong support to the health and private sectors while maintaining financial sustainability for the medium and long term, indicating that these policies were positively reflected. On the gradual recovery of the local economy, which witnessed an accelerated growth in a number of economic activities.
He pointed out that the budget confirms the keenness of the government of the Custodian of the Two Holy Mosques to move forward towards promoting economic growth in the post-pandemic stage, and to harness financial resources to spend on health, education and the development of basic services, in addition to the continuation of support and social benefits, indicating that the budget is a continuation of the process of reforms supporting the development of Managing public finances, with the government’s commitment to maintaining previously announced spending ceilings, in order to ensure fiscal sustainability in the medium term and a strong financial position that enables the state to face any emergency changes and absorb unexpected economic shocks.
Al-Jadaan pointed out that the budget estimates for 2022 AD show that total revenues will amount to 1,045 billion riyals, an increase of 12.4% over what is expected to be achieved in 2021, while total expenditures are estimated at about 955. billion riyals, while it is expected to achieve surpluses of about 90 billion riyals (2.5% of the gross domestic product), indicating that these surpluses will be directed to strengthening government reserves, supporting development funds and the Public Investment Fund, and considering the possibility of accelerating the implementation of some programs And strategic projects with an economic and social dimension, or repaying part of the public debt according to market conditions.
With regard to the public debt, he explained that its indicators are expected to improve in 2022 AD to decrease to about 25.9% of GDP, compared to 29.2% in 2021 AD as a result of expectations of achieving budget surpluses as well as GDP growth, provided that borrowing is made to repay the principal debt that It is due to be repaid in the future or to take advantage of favorable opportunities in the market to support reserves or finance capital projects that can be accelerated through annual issuances, pointing out that the debt-to-GDP ratio is expected to remain at appropriate levels in 2024 to reach 25.4%, and that The government is working on developing a risk management framework, which aims to follow up and monitor the most prominent developments in the local and global economy, to identify the risks arising from them, and then evaluate their effects.
And he indicated that the government seeks in 2022 and in the medium term to support the continuation of recovery in economic activity, while preserving the initiatives that have been started to be implemented during the past years, and a commitment to achieving the goals of the Kingdom’s Vision 2030 by reducing dependence on oil revenues, diversifying the economy and developing non-oil revenues. and ensuring its sustainability, referring to the progress made during the past period in implementing the vision realization programs and major projects, as well as investment projects in various sectors, including infrastructure projects.
The Minister of Finance explained that the Kingdom’s economy is witnessing a continuous growth in the role of economic enablers in support of the private sector, and on top of these potentials is the effective development contribution of projects and programs undertaken by the Public Investment Fund and the National Development Fund, in addition to the progress in implementing the National Industrial Development Program And Logistics Services (NADLP), the National Investment Strategy, the Partner Program, the Financial Sector Development Program, and privatization, pointing out that the success of these possibilities is positively reflected on the performance of public finances by stimulating and diversifying economic growth, and thus improving non-oil revenues, as well as limiting the success of these possibilities. From pressure on government spending, especially with the private sector driving investment and employment.
The minister pointed to the remarkable growth in the performance indicators of activities until the end of the third quarter of 2021 AD, which reflects the continuation of the state of gradual recovery that was accompanied by the rapid rise in immunization rates from the (Covid-19) virus, which contributed to easing more precautionary measures taken in the Kingdom, explaining Preliminary estimates for the year 2021 show a real GDP growth of 2.9%, driven by the rise in non-oil GDP, which is expected to record a growth of 4.8%. The forecasts for 2022 AD also indicate a real GDP growth of 7.4%, driven by the rise in oil GDP related to the OPEC + agreement, in addition to the expected improvement in non-oil GDP with the continued recovery of the economy and the implementation of projects and programs that support growth and economic diversification.
On the financial sustainability program, he explained that the gains and the fundamental transformation during the previous period in the method of public financial management required moving from the stage of financial balance to a stage that seeks to maintain financial sustainability through effective planning tools that evoke spending requirements over a longer time period. It helps to protect this planning and the ability to spend planned in the medium term by reducing the linkage to external factors, including fluctuations in the oil markets, so as not to cause confusion in this planning, pointing out that the program is expected to achieve many benefits in economic terms, as it will contribute to continuing to achieve Stable growth rates for the non-oil economy, mitigating the impact of energy price fluctuations on the national economy, in addition to enhancing the ability of the private sector to clearly plan investments. On the public finance side, it will contribute to enhancing the effectiveness of financial planning, raising the efficiency of government spending, and exploiting budget surpluses to enhance financial reserves or direct them to investment spending that ensures diversification of the economy and achieves sustainable economic growth goals in the medium and long term.
He concluded his statement that the budget for the year 2022 comes as a result of planning and participatory work among all government agencies, where efforts were made and capabilities harnessed and energies were mobilized in preparing this budget in an appropriate manner through which it achieved its strategic objectives until it came out with the utmost transparency and clarity, based on the direct commitment of the government regarding the financial and economic conditions , by issuing budget-related reports such as performance reports: quarterly, semi-annual, annual, and introductory statement, in addition to the budget statement and citizen’s copy, in line with the Kingdom’s 2030 vision.