SAUDI NON-OIL REVENUE RISES AS REFORMS YIELD RESULTS
Though transformation means the country’s expenses are also higher. Reports by Sarmad Khan in Riyadh
Non-oil revenues in Saudi Arabia rose 48 per cent yearon-year to 211 billion riyals (Dh206.6bn) while spending also increased, as the world’s biggest oil exporter continues to implement reforms to diversify its economy away from hydrocarbons, its finance minister said.
“That is significantly more than where we were when we were speaking on this panel one year ago,” Mohammed Al Jadaan told delegates on the final day of the three-day Future Investment Initiative summit in Riyadh on Thursday.
“This is not oil [revenues], this is not market driven, this is actually self [imposed] initiatives that have been implemented with a lot of care and a lot of planning, and we ended up with a significant reduction in reliance on one volatile commodity.”
Saudi Arabia, the biggest Arab economy, also saw expenditure increase by 25 per cent for three months to September 30 as a rise in oil prices helped the kingdom fuel its economy.
The spending increase, the minister said, is in line with the kingdom’s Vision 2030 economic reform programme and is enabling different ministries to execute their transformation projects with the “right budgets”.
Saudi Arabia had to tighten its purse strings in the wake of a three-year oil price slump that saw prices fall from a peak of $115 per barrel in mid-2014 to less than $30 a barrel in the first quarter of 2016.
As a result of heavy reliance on hydrocarbons for revenue, the kingdom was forced to cut spending, had to borrow heavily from local and international debt markets and launch fiscal and economic reforms to cut its deficit.
Since enacting reforms, the country has cut its deficit from 16 per cent three years ago to 9 per cent last year. At the beginning of 2018, Saudi Arabia said it expects the budget deficit to fall to 7 per cent. However, Mr Al Jadaan said it is likely to be “a lot less than” that.
“We are going to reduce our deficit even more than the budget,” he said. “We managed to [do it] through a very disciplined fiscal balance programme.”
The kingdom’s annual gross domestic product is expected to grow by 2.2 per cent this year and 2.4 per cent in 2019, according to estimates from the International Monetary Fund.
The country could also cut its public wage bill to 45 per cent of its total budget next year despite growth in employment, its crown prince said on Wednesday.
“The rate of spending, the capex is increasing and the salaries [the ratio of public wage in the budget] are decreasing,” Crown Prince Mohammed bin Salman told delegates on Wednesday. “Three years ago, the rate of salaries to the budget was 50 per cent [and] we expect it next year to be 45 per cent, [although] spending is increasing.”
The public wage bill is decreasing despite a rise in the employment level in the country, and unemployment will continue to fall, and economy will keep on strengthening, he added.