The Communication and Financial Knowledge Center (CFKC) held a webinar on Monday, July 12, 2021 coinciding with IMF release of Article IV Consultation Report KSA – 2021. The webinar was attended by Mr. Abdulaziz Alrasheed, Assistant Minister of Finance for Macro-Fiscal Policies and International Relations, Dr. Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund, Dr. Riyad Alkhorayef, Undersecretary of the Ministry of Finance for International Affairs, and Mr. Tim Callen, Head of the IMF Mission to Saudi Arabia, and moderated by Ms. Rima Almedaires, Communication Consultant.

 

Alrasheed explained that the IMF acknowledged the substantial advantages gained from the Kingdom's Vision 2030 in the final statement of Article IV Consultation Report, and strongly supported the government's plan, which is focused on three major issues: Reacting to Covid-19 pandemic, setting short-term objectives to keep the recovery going, and implementing structural changes within the Vision 2030 framework to achieve as much economic diversity as feasible. He pointed out that the government's structural reforms helped promote digital transformation, improve financial services, and enhance fiscal policies and the financial sector. He also indicated that Saudi Arabia has one of the lowest non-oil GDP decline rates among the G-20's top five countries. Alrasheed emphasized the government's commitment to the Fiscal Sustainability Program, which is the cornerstone of fiscal policy objectives and has helped to reduce the budget deficit in GDP from 15.8% in 2015 to 4.5% in 2019.

 

Dr. Jihad Azour, for his part, commended the Saudi government's swift and decisive response to the Covid-19 pandemic crisis, noting that the government's measures, as well as the supporting programs offered, helped to mitigate the pandemic's impact on society and the private sector.

Government reforms have resulted in a substantial rise in women's economic involvement, but further reforms were required in other areas, including: reduce the government's fiscal deficit over the next few years to better prepare for the future, increase women's involvement in the economy, make it easier for expatriates to switch jobs, and finally, promote investment and improve the investment environment for private companies by further streamlining government regulations and strengthening legal frameworks.

 

 

In turn, Dr. Riyad Alkhorayef noted that the government's financial response to the Covid-19 pandemic crisis was much larger than what was injected into emerging markets in the G-20 countries, and that the Saudi public sector has committed adequate resources and energy to help the health and private sectors recover. He also expected a robust rebound in the Saudi economy this year compared to the last year, led by the non-oil sector, particularly the private sector. He stated that during the pandemic crisis, banks' abundant liquidity made it possible for the private sector to access credits without difficulty, anticipating the Kingdom's debt level would stay manageable this year, noting that the Kingdom's debt is lower than that of other countries. He also emphasized that the Kingdom has strong economic foundations, significant financial assets maintained by the Public Investment Fund, as well as capable and efficient financial system.

 

Additionally, the head of the IMF Mission to the Kingdom anticipated that the Saudi economy's positive indicators would continue as a result of the reforms implemented in accordance with the Kingdom's Vision 2030, noting that the success and progress achieved during the pandemic crisis are significant and deserve praise, but the government still has a lot to do. He pointed out that IMF report showed significant recovery to economic activity in mid-2020 and growth in early 2021, indicating that most industries in the Kingdom seem to be recovering with the exception of the tourist industry owing to travel restrictions. He added that this year the IMF anticipates growth of 2.4% in the oil and non-oil sectors and a rise of approximately 2.8% in the following five years, which would be reflected in Saudi GDP growth. He believed that throughout the economic crisis, the Saudi banking sector performed well and efficiently and its excellent liquidity and robust governance would allow it to play a role in the development of the national economy.

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