Saudi Arabia is projecting an expected spending of SR1,020 billion for 2020 against the SR1,048 billion projected in 2019, Finance Minister Mohammed Al-Jadaan said on Thursday while releasing the pre-budget statement for Fiscal Year 2020. The minister stated that total expenditure in 2019 is expected to reach SR1,048 billion, as the government aims to achieve fiscal discipline and stability as key objectives for sustainable economic growth over the medium term. The Kingdom expects its budget deficit to widen to SR187 billion next year, from a projected SR131 billion for this year, while the Kingdom expects revenues of SR833 billion for 2020, down from SR917 billion projected for 2019, the minister said. The Ministry of Finance report stated that Saudi Arabia expects its oil gross domestic product (GDP) to fall by 3% this year. "For the non-oil GDP we maintained GDP growth at 2.9%," Al-Jadaan said Al-Jadaan indicated that the preliminary economic results and indicators reflect significant progress. The real GDP has achieved positive growth rates of about 1.1% during the first half of 2019 supported by the growth of the non-oil sector, which grew by 2.5% in the same period. Initial estimates indicate that the Kingdom expects GDP to grow higher than announced. It predicts real GDP growth of 0.9% in 2019, 2.3% in 2020, inflation at -1.0% in 2010 and 2.0% in 2020. The minister also said he expects public debt at 26% of GDP, or SR754 billion in 2020 against SR678 billion in 2019. Al-Jadaan indicated that the Kingdom's fiscal policy aims to achieve a balance between maintaining fiscal sustainability and enhancing economic growth and development. It also hopes to support economic transformation in line with Vision 2030, by continuing to increase efficiency and effectiveness within the framework of fiscal discipline, improving the basic services provided to citizens, diversifying government revenue sources, and empowering the private sector. The 2020 budget will also focus its expenditure on Vision Realization Programs which represent the main tool to realize economic transformation objectives, including: housing programs, the quality of life program, privatization program, mega projects, private sector stimulus packages and other major projects across various sectors. These projects will support non-oil GDP growth in 2020 and over the medium term, Al-Jadaan said. He also pointed out that the implementation of these programs and initiatives has led to performance improvement in various sectors, the most important of which is the construction sector, as it returned to positive growth rates during 2019 after declining over the previous three years. The minister said, "The Cabinet's approval of the government Tenders and Procurement Law will ensure fairness and transparency, promote competition, prevent the influence of personal interests, protect public money and provide a fair treatment to competitors, which will lead to achieving the principle of equal opportunities — one of the ministry's objectives." He added that the 2020 budget will continue the implementation of programs and initiatives that aim at strengthening the private sector's role in the economy as the main driver of economic growth and job creation. Currently, there are 22 relevant support initiatives for the private sector, including cash subsidy, commitments and financing guarantees, offered by the entities implementing the initiative such as the Ministry of Finance, the Ministry of Housing, General Investment Authority, etc. Al-Jadaan stressed that the 2020 budget will continue to raise the efficiency of public finance management to maintain fiscal sustainability and maximize return on expenditure. This takes into account the potential impact of domestic and international developments during budget execution. In general, he said, the economy has resumed positive and high growth, as observed across various economic sectors. In the first half of 2019, wholesale, retail trade, restaurants and hotels, and finance, insurance, and real estate activities grew by 3.8% and 5.1% respectively compared to the same period last year. Furthermore, transport, storage and communication, and community, social and personal services activities (including arts and entertainment) increased by 5.6% and 5.9% respectively compared to the same period in FY2018. The government is continuing its efforts to develop local content, enhance the competitiveness of the economy and improve the business environment. Al-Jadaan stressed that the joining of the Saudi Stock Exchange to several global emerging markets indices is a testament to the success of these efforts, as it is expected to reap many economic and financial benefits, including increasing the efficiency and depth of the financial market, increasing the role of institutional investment, as well as improving the market liquidity through the flow of foreign investments, which has seen significant growth during the first half of this year compared to the same period last year. Non-oil private sector also witnessed positive growth during the first half of 2019 for the first time in three years supported by policies that aim to stimulate the private sector. Al-Jadaan noted that releasing the pre-budget statement for the second consecutive year asserts the government commitment to reinforce governance and control of public finance, while enhancing the policy of financial disclosure by strengthening transparency principles. In this context, the Kingdom has recently joined the International Monetary Fund's Special Data Dissemination Standard (SDDS), which is considered as one of the best international practices in the dissemination of fiscal and economic data for countries. This is an important step towards the Kingdom's path in enhancing fiscal disclosure and transparency in accordance with international standards.
