Riyadh, December 07, 2022:
Under the presidency of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, the Council of Minister approved in its session today, December 07, 2022, the Annual Budget for the fiscal year 2023, with total approved expenditure of SAR 1,114 billion, estimated revenues of SAR 1,130 billion and an estimated surplus of SAR 16 billion (0.4%of GDP).
Budget 2023 supports the continuation of fiscal sustainability and focuses on completing the process of economic and structural reforms aimed at strengthening the Kingdom's fiscal position, enhancing the economy's resilience, and keeping pace with rapid global changes. In addition, it continues to implement programs and projects that support growth, expand the economy, and achieve inclusive development.
Over the past years, the government has succeeded in achieving the main objective of fiscal reforms in its first phase the “Fiscal Balance Program", which was aimed at controlling high deficit rates to reach medium-term fiscal balance. While the second phase of fiscal reform the “Fiscal Sustainability Program”, which also focuses on developing sustainable fiscal indicators and policies in the medium- and long-term. This is delivered through stable spending levels directed towards strategic expenditure that supports structural change of the economy. This will achieve the objectives of Saudi Vision 2030 and is within a framework that ensures maintaining sufficient levels of reserves and sustainable amounts of public debt.
For the next year and in the medium term, the budget is aimed at continuing to implement giga projects and previously announced initiatives, such as the National Transformation Program, National Industrial Development and Logistic Program, Quality of Life, Pilgrim Experience Program, and Saudi Green Initiative, and other programs, initiatives, and projects that will bring about positive structural changes that promote the improvement in the economic base and the quality of life for citizens and residents and of the services provided to them. The Budget also aims to raise the contribution of investment to GDP, enhance the investment environment, and build investors' trust in the economy through providing investment enablers and incentives, and promoting transparency.
On this occasion, His Excellency Mr. Mohammed Al-Jadaan, the Minister of Finance, extended his gratitude to the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud, and His Royal Highness Prince Mohammed bin Salman Al Saud, the Crown Prince and Prime Minister, for approving the Budget. His Excellency affirmed that achieving comprehensive development, providing job opportunities, creating new businesses, and raising the quality of life of citizens and residents is the government's top priorities. He indicated that the budget reflects the commitment of the Saudi government to move towards maintaining stability and achieving fiscal sustainability, promoting transparency and disclosure, adopting consistent policies to overcome world crises, and enabling the private sector to lead economic growth in the medium term.
He emphasized the government's determination over the next year and the medium term to continue its efforts in raising spending efficiency and fiscal control, as it aims to achieve comprehensive development at regional and sectoral levels and develop promising sectors that contribute to achieving economic and social returns in the medium- and long-term, as well as localizing military industries, as the Kingdom continues to implement programs and initiatives of the social support and protection system. Preliminary estimates for 2023 indicate the growth of real GDP at a rate of 3.1%.
His Excellency pointed out that the economic and fiscal reforms that the Kingdom implemented continue to drive growth despite the challenges and crises facing the world's economies, which affect the future growth of the global economy and its future prospects, such as the food crisis, inflation, supply chain disruption and geopolitical conditions.
Additionally, His Excellency commended the government's proactive steps in mitigating the economic and social impacts of these crises, as well as the economic and fiscal reform packages, which have been balancing between increased spending, fiscal stability, and sustainability that support economic recovery. This is in addition to the implementation of strategic projects, the increase of social protection programs, and supporting strategic stocks of basic materials while accelerating the implementation of some programs and projects to advance the realization of Saudi Vision 2030. His Excellency also pointed out that the budget's projection for inflation will fall to 2.1% for 2023 and is expected to stay at normal levels in the medium term.
His Excellency explained that the partnership between government entities has contributed to many reforms in the process of preparing the annual budget and raising the quality of its implementation. Moreover, partnership with the private sector has enhanced opportunities to enable it to be the main driver of economic growth and the largest contributor to creating jobs for citizens.
Furthermore, Mr. Al-Jadaan pointed out that the balance of public debt is expected to reach SAR 951 billion (24.6% of GDP) in 2023, compared to SAR 985 billion (24.9% of GDP) in 2022, noting that it is expected that local and external borrowing will continue to repay the outstanding debt in 2023 and over the medium term. Moreover, available opportunities will be seized according to market conditions to proactively implement additional financing for the principal debt over the coming years. This is in addition to financing some strategic projects, exploiting market opportunities to implement alternative government financing to finance the transformational spending of capital projects and infrastructure.
His Excellency highlighted that the balance of government reserves is estimated to reach SAR 399 billion by the end of 2023, as a result of strengthening reserves with a portion of the expected surpluses to maintain safe levels of government reserves to enhance the government's fiscal position and its ability to deal with external shocks.
His Excellency concluded his statement by mentioning that the Budget Statement 2023, issued recently, reflects the government’s intention to enhance the level of fiscal disclosure and confirm the principle of transparency of public finances in the Kingdom and its policies, through the quarterly reports, Mid-Year Economic and Fiscal Performance Report, Pre-budget Statement Report, and the Citizen Version.