Saudi Arabia Aims to Pump $100 Bn Investments for Aviation Reform

Saudi Arabia moves to improve airport and air transport services (Asharq Al-Awsat)
Saudi Arabia moves to improve airport and air transport services (Asharq Al-Awsat)
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Saudi Arabia Aims to Pump $100 Bn Investments for Aviation Reform

Saudi Arabia moves to improve airport and air transport services (Asharq Al-Awsat)
Saudi Arabia moves to improve airport and air transport services (Asharq Al-Awsat)

The Saudi General Authority of Civil Aviation (GACA) announced the economic policy for the Kingdom’s aviation sector that seeks to attract $100 billion to raise air traffic services.

The GACA announced adopting three economic regulations for airports, ground handling services, and air cargo and air transport services, which will come into force on Oct. 30.

The statement noted that the economic policy aims to boost the operation of the Kingdom’s airports and improve the performance of national air carriers as part of the Authority’s efforts to transform the Kingdom into a transportation and cargo services global hub.

It also provides an infrastructure that stimulates competition, attracts foreign investment, achieves growth, and enables innovation in the aviation sector.

The measures align with the National Aviation Strategy enabling it to be the number one sector in the Middle East and contribute to diversifying sources of income.

- Investment environment

The economic policy and set of regulations issued by the Authority contribute to achieving the goals of the Aviation Strategy and stimulating the investment environment by raising the contribution of the transportation and logistics sector to the GDP to 10 percent.

It also helps create direct and indirect job opportunities and pumps investments worth up to $100 billion from the public and private sectors by 2030,

It will create a competitive environment that provides equal opportunities for current operators and future investors to enhance the Authority’s regulatory role in the aviation sector.

GACA issued the economic regulations for airports to develop the foundations regulating the work of operators.

It supports the privatization of airports, facilitates the procedures for new investors to join the aviation market in the Kingdom, and enables airport operators to set wages according to their plans.

The regulation also confirms adherence to the Authority’s regulatory controls to enable airport operators to flexibly diversify their revenues by increasing revenues from non-navigational services.

It would motivate airports to diversify services and commercial activities, keeping pace with international standards and attracting air traffic.

The Authority issued the economic regulations for ground handling services and air cargo services, which stipulate that everyone who wishes to provide services at the Kingdom’s airports must adhere to the principle of ‘freedom to enter the market.'

- Boost air traffic

The economic policy also contributes to facilitating the issuance of financial licenses for ground handling and air cargo service providers to attract investments.

It enables transparency in transactions by activating consultations between various service providers and clarifying the roles and responsibilities of each category of these service providers.

In addition, the Authority issued economic regulations for air transport services to facilitate the requirements for issuing financial licenses for air carriers and cancel the economic conditions for non-commercial flights, enhancing air connectivity to the Kingdom.

The approved regulation also includes adopting new special controls by distributing air traffic rights between national carriers on international routes with limited capacity to ensure equal opportunities.

Notably, the economic regulations were approved after collecting public opinions through a survey, putting them on a poll platform, and holding meetings and workshops with various stakeholders within the aviation sector.

GACA noted that the implementation of the provisions of the regulations will begin in a phased manner from the date of their implementation and over the coming 18 months to ensure the sector’s readiness to apply these provisions efficiently



IMF Praises Saudi Arabia’s Unprecedented Economic Transformation

Efforts to diversify the economy have started to bear fruit: IMF (Asharq Al-Awsat)
Efforts to diversify the economy have started to bear fruit: IMF (Asharq Al-Awsat)
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IMF Praises Saudi Arabia’s Unprecedented Economic Transformation

Efforts to diversify the economy have started to bear fruit: IMF (Asharq Al-Awsat)
Efforts to diversify the economy have started to bear fruit: IMF (Asharq Al-Awsat)

The International Monetary Fund (IMF) has praised Saudi Arabia’s significant economic changes under the “Vision 2030” national transformation plan, noting improvements in public finances and business regulations.
An IMF mission expected non-oil growth in Saudi Arabia to reach around 3.5% in 2024, crediting careful economic policies and major reforms.
The mission also highlighted record-low unemployment rates and controlled inflation in the country, and welcomed recent updates to funding requirements aligned with “Vision 2030” goals.
The IMF released a concluding statement at the end of its official staff visit to Saudi Arabia.
In the statement, the IMF said: “Saudi Arabia’s unprecedented economic transformation is progressing well.”
“Prudent macroeconomic policies, transformative changes—including through fiscal reforms and in the regulatory business environment—and strong domestic demand have helped prop up non-oil growth. Inflation remains contained.”
“Spending reprioritization and recalibration of major spending programs are ongoing. Efforts to diversify the economy have started to bear fruit.”
“Building on these successes, it will be important to sustain the non-oil growth momentum, maintain financial sector stability, continue mitigating risks of overheating, reverse declining total factor productivity and ensure inter-generational equity.”
Economic Activity Remains Robust
According to the IMF, real non-oil growth decelerated from 5.3% in 2022 to a still robust 3.8% in 2023, driven mostly by private consumption and non-oil investment.
While non-oil growth for Q1-2024 indicates some moderation in economic activity— the IMF staff estimated that the output gap remains in positive territory, close to 2% of the non-oil potential GDP.
The statement also noted that the Saudi economy weathered the geopolitical tensions in the Middle East well, thanks to minimal trade and financial exposures to the affected regions and uninterrupted shipments.
Unemployment Rate Reached Historic Lows
In 2023, the Saudi economy added over one million jobs, primarily in the private sector. The overall unemployment rate for Saudis dropped to 7.7% in the last quarter of 2023—inching closer to the 2030 Vision objective of 7%.
Labor force participation rates have remained at historically high levels but relatively flat over the past year for both men and women, albeit with the women’s rate still comfortably exceeding the Vision 2030 goal of 30%.
Headline Inflation Has Decelerated Rapidly
After peaking at 3.4% in January 2023, year-on-year inflation receded to 1.6% in April 2024, helped by an appreciating nominal effective exchange rate.
However, rents are growing at a brisk rate of about 10% amid inflows of expatriate workers and large redevelopment plans in Riyadh and Jeddah.
Wholesale prices have also edged up recently, reflecting an increase in input costs. So far, some uptick has been observed in the wages of high-skilled workers.
Additionally, the current account surplus narrowed significantly.
The decline in the current account surplus from 13.7% of GDP in 2022 to 3.2% of GDP in 2023 mainly reflected lower oil exports and strong growth in investment-related imports.
These were partly mitigated by a record surplus in the services balance, including a 38 percent surge in net tourism income.
The Saudi Central Bank’s (SAMA) holding of net foreign assets reached $423.7 billion in April 2024, which was slightly above the end-2023 level.
Reserves remain ample, representing 15.6 months of imports and 208% of the IMF’s reserve adequacy metric by end-2023.