IMF endorses Saudi policy shift to tackle low oil prices
JEDDAH: International Monetary Fund (IMF) Managing Director Christine Lagarde on Wednesday welcomed steps that Saudi Arabia has taken to reduce its reliance on oil and increase new employment opportunities.
In a statement posted on the official website of the IMF, she said: “Saudi Arabia has begun a major policy shift to respond to low oil prices. Vision 2030 and the National Transformation Program (NTP) contain ambitious policy reforms to reduce the economy’s reliance on oil, strengthen non-oil growth, and increase employment opportunities. These reforms are very welcome.”
She said fiscal adjustment had started with the government containing expenditures and raising additional revenues.
“These efforts should continue over the medium-term including through further increases in energy prices which are still low by international standards, further revenue-raising measures including from the planned introduction of excises and the VAT at the GCC level, and further restraint,” she said.
During her visit to Riyadh, she said she had the privilege of meeting King Salman. “We discussed the economic outlook and current policy developments in Saudi Arabia. I had fruitful discussions with Finance Minister Ibrahim Al- Assaf and Saudi Arabian Monetary Agency (SAMA) Gov. Ahmed Alkholifey,” she said.
She also took part in the meeting of Gulf Cooperation Council (GCC) finance ministers and central bank governors in which views on the region’s outlook, challenges and policy priorities were exchanged.
“The reforms that the GCC countries have been implementing spending over the past year in response to the decline in oil prices are impressive,” she said.
“Continued fiscal adjustment will be needed over the medium term. Where possible, countries should phase in deficit-reduction measures gradually, while strengthening their medium-term fiscal frameworks and fiscal transparency to support the adjustment. Policies to support growth and employment will also need to continue,” she added.
“The IMF,” she said, “stands ready to continue to support the GCC countries in addressing their challenge of adjusting to the lower oil price environment.”