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 Ministry of Finance Releases the kingdom’s Pre-Budget Statement

HE Mohammed Al-Jadaan: “Spending Efficiency and Private Sector Empowerment Enhance Fiscal and Economic Objectives”

Riyadh, 31 October 2019: The Ministry of Finance has announced today the pre-budget statement for Fiscal Year 2020.  The pre-budget statement aims to inform citizens, interested parties and analysts of the public finance performance developments during 2019, and main fiscal objectives and economic estimates for Fiscal Year 2020 and the medium term. The statement also briefly explores key initiatives and programs that will be implemented during the coming fiscal year within the framework of Saudi Vision 2030. It also confirms the government's approach to reinforcing transparency and financial disclosures.

His Excellency, Mohammed Al-Jadaan, Minister of Finance, has indicated that the Kingdom's fiscal policy aims to achieve a balance between maintaining fiscal sustainability and enhancing economic growth and development, in addition to supporting 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. He also adds that 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.   

His Excellency also 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 GDP is expected to grow by 0.9% in 2019, with an expected acceleration in non-oil GDP growth rates. This performance is expected to continue to improve in 2020, with GDP growth projected to reach 2.3%. 

His Excellency states that total expenditure in 2019 is expected to reach SAR 1,048 billion, as the government aims to achieve fiscal discipline and stability as key objectives for sustainable economic growth over the medium term. Revenues for the current fiscal year 2019 are expected to reach SAR 917 billion, a 1.2% growth compared to 2018. The ratio of non-oil revenues to non-oil GDP is expected to increase to 16% at the end of 2019 compared to only 7% in 2012. The budget deficit is expected to continue to decrease in this fiscal year 2019, reaching 4.7% of GDP, compared to 5.9% last year.

It is projected that expenditure will reach SAR 1,020 billion in 2020, focusing on improving the efficiency of spending without any disruption to diversification and transformation plans. Revenues are projected to reach about SAR 833 billion in 2020, while the budget deficit is projected reach about 6.5% of GDP. 

His Excellency also pointed out 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. 

His Excellency, Mohammed Al-Jadaan, continued to emphasize 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. 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. 

His Excellency 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. In general, 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. His Excellency has 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.

HE 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. 

He also pointed out that the budget is usually approved in December of each year and may include adjustments to the contents of this pre-budget statement in the light of fiscal and economic developments.

To review the Pre-Budget Statement Click here 

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Last Update : 10/31/2019 10:53 PM