The International Monetary Fund (IMF) has published its Staff Report for the 2017 Article IV Consultations of Saudi Arabia in early October. The report analyses the magnitude of the economic reforms being carried out by the Kingdom's government. In a statement to Saudi Press Agency (SPA), it also praised the progress being made in achieving the objectives of the structural reform agenda under the Vision 2030, particularly with respect to consolidating the country's fiscal position, which the report says is beginning to bear fruit. The report also noted the progress made to improve the business environment, coupled with the actions taken to enhance transparency and government accountability. Commenting on the report's findings, Mohammed bin Abdullah Al Jadaan, Minister of Finance, welcomed this report and highlighted that it demonstrates the positive impact of the economic reforms implemented by the Kingdom within the vision 2030. He also pointed out that despite the achievements made, the authorities still have a lot to do to achieve the desired goals, and they are committed toward adopting appropriate actions and programs that contribute to the achievement of sustainable development goals in the Kingdom and to the well-being of its citizens. IMF experts expect overall GDP growth to improve over the medium term, despite falling oil prices, thanks to the positive impact of the structural reforms implemented by the Kingdom's government. The experts emphasized the need to continue with a substantial financial adjustment consistent with the financial measures announced in the Financial Balancing Program. The goal of this program is to streamline expenditure to ensure the fiscal balance needed to both create a social safety net whilst supporting fiscal structural reforms that will balance the Kingdom's budget. Regarding revenues, the experts noted the expected positive results from the implementation of the excise tax as well as the roll out of the value added tax by 2018. They stressed that the reform of energy and water prices is an essential part of the economic reform process. The experts also praised the Kingdom's efforts to mitigate the effects of price reform on low- and middle-income households through the implementation of the Citizen Account, which is considered a very important step. Furthermore, the report also highlighted the important steps taken by the Kingdom to improve the efficiency of government expenditure, which will reduce spending and achieve more efficiency gains as a result of improved public investment management. In the same context, the report highlighted the need to expand the work of the Office of Spending Rationalization to include all ministries and agencies, with the goal of achieving greater cost savings. The report also welcomed the steps taken by the Government towards strengthening the fiscal framework and improving transparency, developing the capacity of the overall public finance unit, as well as strengthening expenditure controls and monetary management systems, including through the introduction of the Treasury Single Account. In the context of enhancing transparency, IMF experts noted that the issuance of the first quarterly report on the performance of the State's general budget represents an important step towards increasing public financial transparency and reflects progress in improving the quality of public financial data. They also welcomed improvements in the preparation and dissemination of economic data. The experts predicted that the structural reforms will contribute to boosting non-oil growth in the Kingdom by reducing the obstacles to the growth of private sector and exports, including the reduction of the time required to complete customs clearance procedures, easing the required procedures for starting a business, completing the bankruptcy system and commercial mortgage law. The report welcomed the ongoing efforts and the progress made in the privatization and public-private partnership agendas. The report considered that ongoing reforms to the education and training systems are very important to develop the skills needed in the private sector, while increased foreign labor fees and time-bound wage subsidies for Saudis will help reduce the Saudi-expatriate wage gap. On the performance of the government in terms of financial and banking sector, the report welcomed banks are well regulated and supervised. It also praised the success of SAMA in dealing with the emerging risks in the global financial sector and welcomed the steps taken to strengthen the regulatory and supervisory frameworks and develop the financial safety net. Finally, the report also noted the significant progress made in the implementation of capital market reforms and the measures adopted to support the domestic debt market.
