IMF advises KSA to ease austerity measures

WASHINGTON: Saudi Finance Minister Mohammed Al-Jadaan revealed that the Kingdom may incrementally decrease its energy subsidies, and will take longer to achieve a balanced budget, since it is seeking to mitigate the impact of its drive to achieve public finance reform.

In an interview on Thursday with Bloomberg in Washington, broadcast by Al Hayat TV channel, Al-Jadaan, on the sidelines of the annual meeting of the International Monetary Fund (IMF), said that some of the subsidized domestic energy product prices will raise to international levels later than previously expected.

“The Kingdom will not rush into achieving a balanced budget by 2019, but will take the time to assess the impact of the financial policy on the economy,” he said.

A balanced budget and subsidy decrease are the main factors supporting the Kingdom’s long-term economic plan to reduce its dependency on oil.

IMF staff said that the Kingdom would be better to slow down the austerity measures to avoid crippling its economy.

Al-Jadaan replied by saying: “This might be the first time that IMF has asked a country to slow down. We will take this advice very seriously.”

According to the latest plans, some energy prices might not reach international levels this year, but they will gradually increase “over a longer period of time,” he added.

While the government is working on reducing the budget deficit to less than 10 percent of the GDP this year, authorities see no need to “go from 10 to zero percent in two years,” he said.

He pointed out that the government will accelerate its SR200 billion ($53.33 million) program to boost growth, and that SR40 billion has been committed so far for housing and industrial development funds.