RIYADH — The strategies and procedures that have been adopted by the Saudi government during the past five years have turned to be a good electric shock not only to the economy but to the private sector companies as well in the Kingdom, according to Finance Minister Mohammed Al-Jadaan. Taking part in the Saudi Budget Forum 2023 here on Sunday, the minister said that many companies have become accustomed to the government's mechanism and approach to business over the past decades, though it was a shock for them. "The good thing about it is that the Saudi private sector responded efficiently to this shock, and one of the positive repercussions of that is the diversification of the major businesses away from their traditional activities," he said. Al-Jadaan revealed that more than 99 percent of the government's payments to the private sector this year were paid within 15 days, instead of 45 days as was the case of the payment system of the ministry. This enabled the companies to avoid bearing the burden of high rates of interest when they receive funds from financial firms to meet their operating expenses during the government payment maturity period. Saudi Arabia recorded a surplus of $27 billion (SR102 billion) during the current year of 2022, recording the first budget surplus in 9 years. Al-Jadaan described the journey of transition from deficit to surplus as 'long and difficult,' as the deficit, five years ago, represented about 15 percent of GDP. "We had to withdraw SR1 trillion from reserves, and borrow an additional SR1 trillion from the markets, to cover the deficit," he pointed out. Together with this surplus, the minister said, Saudi Arabia has achieved the goal of the Fiscal Balance Program, which is considered one of the most important economic reform programs within Vision 2030. "Let us now move to the Financial Sustainability Program, which is based on financial planning, whether in terms of revenues or expenditures, for a period of three years, and in some sectors for ten years," he said. Al-Jadaan noted that the Ministry of Finance expects that the 2023 budget will achieve a surplus of SR16 billion, with total revenues reaching of about SR1.13 trillion and expenditures amounting to about SR1.114 trillion for the next year. "Relying on revenues from a volatile source (oil) is very dangerous, which led to deficits in the past," he said while noting that at the end of last year, non-oil revenues covered 40 percent of government spending, while their share was less than 10 percent during the past decade.
