Saudi Arabia unveils SR1.02 trillion budget in privatization push

Cars drive past the Kingdom Centre Tower in Riyadh, Saudi Arabia, January 30, 2018. (REUTERS)
Short Url
Updated 10 December 2019

Saudi Arabia unveils SR1.02 trillion budget in privatization push

  • King Salman pledges to empower private sector and boost transparency across the economy
  • Saudi Finance Minister Mohammed Al-Jadaan said government would continue its focus on developing the private sector

RIYADH: Saudi Arabia is set to spend SR1.02 trillion ($272 billion) next year as the Kingdom embarks on a major privatization push amid a widening budget deficit.
The government’s annual budget released on Monday predicts revenue of SR833 billion in 2020, leaving a projected deficit of SR187 billion — or the equivalent of 6.4 percent of GDP. It anticipates real GDP growth of about 2.3 percent next year.
King Salman announced the figures at a cabinet meeting in Riyadh.
“We are determined to continue implementing economic reforms, diversifying sources of income, including investing the proceeds of Saudi Aramco by the Public Investment Fund, optimizing the use of available resources, empowering the private sector and raising the level of transparency and efficiency of government spending to boost growth and development rates,” he said.

Announcing the budget breakdown, Saudi Finance Minister Mohammed Al-Jadaan said that while spending next year would be less than in 2019, the government would continue its focus on developing the private sector, stressing there would be no increases in taxation.
“Privatization is at the top of the government’s priorities,” he told reporters.
“We will continue to support big projects and will continue to support promising projects,” he said. ” Enabling the private sector is the top priority of Vision 2030. We have more to come and our journey toward Vision 2030 demands it.




Saudi Finance Minister Mohammed Al-Jadaan said the government would continue its focus on developing the private sector. (Ahmed Fathi)

The budget takes place against a backdrop of quickening reforms in 2019 and a number of key events from the record initial public offering of Saudi Aramco to the creation of fast track tourism visas.
“We believe that the revenue assumptions in the budget are realistic, both oil and non-oil,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, told Arab News.
“Despite the planned pullback in government spending, we expected to see a pickup in real non-oil GDP growth as investment activity strengthens. Spending by the PIF will be central for the higher investment activity.

"The finance ministry hosted a visit of international investors to coincide with this year’s budget announcement, underscoring the government’s desire to attract more overseas investment in the slipstream of the world’s biggest IPO. The group included a number of international investment companies, insurers and asset managers, including Goldman Sachs, Mayfair Bank, Etiqa Insurance and Nippon Life Insurance Company among others.
Saudi banks such as SAAB, Samba, NCB, Bank AlJazira and Alinma Bank also attended.
While reducing the Kingdom’s dependence on oil revenues is a key part of the Vision 2030 reform agenda, the commodity remains the principal driver of spending trends for both Saudi Arabia and other Arabian Gulf oil-exporting nations.
They have been coordinating production cuts since 2017 through the OPEC+ group of producers that includes Russia, in an effort to keep the market in balance amid surging output from US shale producers.
Last week the Kingdom spearheaded an agreement between the OPEC+ group of exporters to commit to further output cuts to help avert an oversupply of oil on the global market.
Education gets the lion’s share of government spending in 2020 with some SR193 billion set aside for the sector after more than 500 schools were opened in 2019.
The budget analysis also reveals that most non-oil sectors of the economy posted positive growth rates during the first half of this year with the construction sector recording growth for the first time since 2015.
That helped to reduce the unemployment rate among Saudis at the end of the first half of the year by 0.4 percentage points to 12.3 percent compared to the end of 2018.
US-based IHS Markit analyst Bryan Plamondon, told Arab News: “The 2020 budget highlights rationalized spending, with debt issuance and reserves helping to fill the gap from weaker revenues. We expect the Kingdom’s fiscal account will post wider deficits during 2020–21 as spending on Vision 2030 continues.”

*Click here for the full budget statement from the Ministry of Finance


Houthis, Iran condemned over new drone attacks on KSA

Updated 26 October 2020

Houthis, Iran condemned over new drone attacks on KSA

  • One civilian injured by shrapnel after Saudi-led coalition intercepts four flying bombs launched from Yemen

JEDDAH: Houthi militias and their Iranian backers were condemned on Sunday after the Saudi-led coalition intercepted four explosive-laden drones in two attacks launched from Yemen targeting the south of the Kingdom.

Three of the drones were destroyed early on Saturday and a fourth on Sunday. Shrapnel that fell in Sarat Abidah governorate injured a civilian, and damaged five homes and three vehicles, said civil defense spokesman Capt. Mohammed Abdu Al-Sayed.

Iran was increasing its support to the Houthis to undermine efforts for peace, Dr. Hamdan Al-Shehri, the political analyst and international relations scholar, told Arab News.

“They want the Houthis to sabotage all they can in Saudi Arabia, regardless of whether their target is a populated area, oil facilities or even a sacred place. This adds tension to the area, and that is what Iran is working on.”

Iranians want the Houthis to sabotage all they can in Saudi Arabia, regardless of whether their target is a populated area, oil facilities or even a sacred place. This adds tension to the area, and that is what Iran is working on.

Dr. Hamdan Al-Shehri, political analyst and international relations scholar

Al-Shehri said the situation in Yemen would remain the same unless the legitimate government was returned to Yemen, Security Council Resolution 2216 was put into practice and the Houthi militia were removed.

“Without these things, the Yemen crisis will not end and the whole region will remain in tension.”

The Houthis did not differentiate between military sites and civilian locations, he said.

“Their objective is to damage all places they can reach in Saudi Arabia, and their latest attempts to attack a populated area are nothing new.

“They have also targeted airports and some Aramco oil facilities. If the Aramco attack had not been contained, the damage would have affected the whole Eastern region. They have also attempted to target Makkah, where pilgrims and worshippers were performing their rituals.

“They don’t care. If you look back at what the Revolutionary Guards did at the Grand Mosque, you will realize it is not strange that the Houthis are trying to destroy everything in Saudi Arabia. The strange thing is the silence of the world toward what is happening.”

 

Related