Strong Saudi economic recovery reflected in 2022 pre-budget statement

Strong Saudi economic recovery reflected in 2022 pre-budget statement

Despite the fact that the global economy is still suffering from the effects of the COVID-19 pandemic, the Saudi economy has managed to start recovering quickly from the worst of these effects. This is especially true when you consider the positive economic and financial performance of the second quarter of this year and the positive performance expected next year.

The 2022 pre-budget statement released by the finance ministry this week confirmed that the local economy is rapidly recovering from the effects of the pandemic, with sustainable economic and financial growth this year and expected next year. Economic indicators suggest an ongoing recovery in most economic activities and in some sectors, particularly non-oil sectors.

Government initiatives designed to protect the national economy from the worst consequences of the pandemic have worked well and paid off: Non-oil gross domestic product rose 5.4% in the first half of this year, supported by a real increase 7.5% of private investment. -sectoral activities. Likewise, the initial forecast for 2022 points to 7.5% real GDP growth, benefiting from healthy non-oil GDP growth.

In addition, the significant increase in the Kingdom’s economy is expected to have a positive impact on budget revenues over the medium term. Total revenues are expected to reach SR 903 billion ($ 240.8 billion) in 2022 and approximately SR 992 billion in 2024. This will help support government efforts to support economic growth, especially when considering continuation. the implementation of fiscal initiatives and economic reforms aimed at improving oil revenues and controlling public expenditure.

As stated in the pre-budget statement, the government is targeting a public expenditure ceiling of RS 955 billion next year and RS 951 billion in 2024. This will support the government’s efforts to prioritize public spending according to development needs. .

The National Debt Management Center reported that the annual borrowing plan is being established to meet financing needs as part of the medium-term debt strategy. Public debt is expected to reach SR 989 billion next year, or 31.3% of GDP. However, this amount of public debt is expected to remain stable over the medium term and the debt-to-GDP ratio is therefore expected to drop to 27.6% in 2024.

It is very clear that the Saudi government is firmly committed to continuing its economic and fiscal reform agenda by implementing the necessary measures to ensure fiscal sustainability, strengthen fiscal discipline and control fiscal deficit levels. The deficit is estimated to be 1.6% of GDP in 2022 and is expected to continue to decline gradually over the medium term.

Finance Minister Mohammed Al-Jadaan stressed that the government will continue to provide opportunities through the privatization program by supporting public-private partnerships at the national and international levels in many sectors, including water, health, housing and the media.

The program also aims to increase the private sector’s contribution to GDP from the current 40% to 65% by 2030. The private sector is expected to grow at a faster rate than before, fueling economic growth and creating jobs for men. and Saudi women.

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Dorothy H. Lewis