Saudi Arabia’s budget deficit is set to fall further, and in 2017, the deficit is estimated at SR230 billion, below 10 percent of gross domestic product (GDP) for the first time since 2015. Despite the oil price collapse of the previous year, the Kingdom unveils record $261bn budget.
The finance ministry said Riyadh was pushing back its target to balance the budget from 2020 to 2023. The move comes after the International Monetary Fund urged the government to scale back the pace of austerity measures to boost growth.
Riyadh last week unveiled a $19bn stimulus package to support the struggling private sector, including subsidised loans for housebuyers and developers, fee waivers for small businesses, and financial support for distressed companies.
The economy fell into recession in 2017, contracting by 0.5 percent because of lower oil output and weak confidence in the private sector, which depends on government spending and has been hit hard by the slowdown.
On Tuesday, the finance ministry said that it forecast growth would bounce back to 2.7 percent in 2018. Nasser Saidi, the ex-chief economist of the Dubai International Financial Centre (DIFC) and Lebanese economy minister, told that:
“(It) will be a litmus test for private sector engagement in Saudi Arabia’s economy. Much hinges on providing the stimulus and incentives to the SME (small and medium enterprises) sector and women’s greater participation in the labor force,”
Saidi added in his recent interview for Arab News.
According to the prognosis, next year would be key for the Saudi economy, the Kingdom is able to achieve financial stability by stimulating the private sector to generate more jobs. Nasser Saidi said that the measures already undertaken under Vision 2030 had produced “tangible results.”