The Executive Board of the International Monetary Fund (IMF) concluded discussions on the 2018 Article IV consultation with Saudi Arabia for 2018. The Ministry of Finance welcomed the IMF Executive Board results issued after the conclusion of the discussions and their commendation of the progress made in implementing the Vision 2030 reform programs and its positive impact on the economy of Saudi There is a positive outlook for growth as Saudi continues to implement these reforms. The IMF expects real GDP growth to increase to 1.9% in 2018 driven by an improvement in the growth rate of the non-oil sector, which is expected to strengthen to 2.3% compared to 1.1% in the previous year. Growth is expected to pick-up further over the medium-term as the reforms take hold and oil output increases.
The Directors also welcomed Saudi’s efforts to strengthen the public fiscal situation which contributed to reducing the fiscal deficit. The fiscal deficit is projected to continue to narrow to 4.6% of GDP in 2018 and then further to 1.7% of GDP in 2019. The Directors agreed that targeting to balance the General Budget in 2023 is very appropriate and also welcomed the progress made to strengthen the medium-term fiscal framework, improving transparency and developing the overall Macro Fiscal Analysis.
The Directors commended the progress made in privatization plans and public-private partnerships and the creation of employment opportunities for citizens in the private sector, including policies aimed at enhancing the participation of women in the labor market. The Directors also welcomed the efforts of the Saudi Arabian Monetary Authority (SAMA) for enhancing liquidity management. The IMF pointed out that banks enjoy good capital and high liquidity. The Board also agreed that the exchange rate peg to the U.S. dollar continues to serve well given the structure of the Saudi economy.
In line with this, the Directors recommended to continue the implementation of structural reforms to improve the business environment, deepen the capital markets, increase funding for SMEs and implement privatization programs and public-private partnerships to achieve the objectives in Vision 2030. The Directors consider the importance of strengthening education and training and developing policies that create jobs for both males and females in the private sector.
HE Mr. Mohammed bin Abdullah Al-Jadaan, Minister of Finance, commented “We appreciated that the IMF Executive Board recognize the Government's achievements and efforts in implementing reform plans in line with Vision 2030," stressing that these plans come from the directive of the Custodian of the Two Holy Mosques, King Salman bin Abdul Aziz, and the follow-up and continuous supervision by His Royal Highness Prince Mohammed bin Salman, Crown Prince, Vice President of the Council of Ministers, Minister of Defense, and Chairman of the Council of Economic Affairs and Development Affairs.
"We will continue our efforts to implement reform plans to diversify the economy and maintain public finances by raising the efficiency of public finance management, developing the state budget preparation procedures, improving financial and economic analysis, and implementing the medium-term fiscal framework, management of expenditure ceilings until the year 2023 to achieve the best social, financial and economic returns and to improve transparency. HE Al-Jaddan also added "there is still a lot of work to be done to ensure a successful future for the people and economy of the Kingdom in line with the aspirations of our wise leadership".