“Saudi Arabia is making good progress in implementing its ambitious reform program under Vision 2030. The government remains committed to wide-ranging economic and social reforms to transform the economy away from its traditional reliance on oil and to create a more dynamic private sector that creates jobs for the growing working age population. Growth is expected to pick-up this year and over the medium-term as reforms take hold.
Vast wealth and the promise of dramatic change make for cautious optimism concerning Saudi Arabia, the chief executive…442 Views | the publication reaches you by | Saudi Arabia Today
“Targeting a balanced budget in 2023 is appropriate. The government should now focus on delivering on this objective. Limiting the growth of government spending will be necessary to achieve the fiscal targets. Major progress has been made in implementing new revenue initiatives. The VAT is a milestone achievement in strengthening the tax culture and tax administration of the country. The recent energy price reforms and the introduction of the citizens’ accounts are welcome. Further gradual energy price increases should continue, while the citizens’ accounts should be reviewed periodically to confirm they are adequately compensating low and middle-income households for the higher energy/VAT costs.
“Reforms to strengthen the budget process and the fiscal framework, increase fiscal transparency, and develop macro-fiscal analysis are making good progress. Broadening the coverage of fiscal data beyond the central government would ensure a more complete assessment of the government’s impact on the economy. A strong asset/liability management framework should also be developed to enable a full evaluation of the impact of decisions being taken on and off-budget on the public sector balance sheet.
“The respective roles of the public and private sectors in developing the non-oil economy need to be carefully considered. While the public sector can be a catalyst for the development of some new sectors, it is important that it does not crowd-out private sector involvement, nor remain a long-term player in markets where private enterprises can thrive on their own.
“The government is focused on job creation for nationals in the private sector, particularly for youth and women. Policies should focus on sending clear signals about the limited prospects for public employment, easing restrictions on expatriate worker mobility, further strengthening education/training, and continuing to support increased female participation.
“Considerable progress is being made to improve the business climate. Recent efforts have focused on the legal system and business licensing and regulation. The public procurement law that is being updated has a key role to play in strengthening anti-corruption policies. The privatization/PPP program, which was recently approved, should be accelerated.
“A balance is needed between pursuing financial development and inclusion and financial stability. Increased SME finance, more developed debt markets, and improved financial access especially for women as envisaged under the Financial Sector Development Program will support growth and equality. Reforms should focus on removing structural impediments that may dissuade financial institutions from entering these markets.
“The exchange rate peg to the U.S. dollar continues to serve Saudi Arabia well given the structure of the economy.
“While progress has been made in increasing data availability, more needs to be done to ensure that an accurate and timely assessment of economic developments is possible.
“We would like to thank the authorities for their warm hospitality, cooperation, and discussions during our visit.”
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