State Revenue System Shifts Saudi Arabia to Governance and Sustainability

The Saudi capital, Riyadh. Reuters
The Saudi capital, Riyadh. Reuters
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State Revenue System Shifts Saudi Arabia to Governance and Sustainability

The Saudi capital, Riyadh. Reuters
The Saudi capital, Riyadh. Reuters

Saudi Arabia's financial system has entered a new phase of structured governance following the Cabinet's approval of the updated State Revenue System during its recent session chaired by Crown Prince and Prime Minister Mohammed bin Salman.

The legislation represents a fundamental shift in the economic philosophy of public finance management, moving beyond the traditional concept of fee collection to establish an integrated framework for strategic planning and comprehensive financial governance.

The significance of the new system extends beyond its regulatory function. It serves as a safeguard for medium- and long-term fiscal sustainability by comprehensively regulating every stage of public revenue management - from initial forecasting and estimation through to final settlement.

Expanding Coverage and Governing Sovereign Revenue Flows

The updated system places all public financial inflows under a unified regulatory framework, expanding the scope of state revenues to include a comprehensive range of structural and sovereign income sources.

These encompass natural resources and national assets - the country's most significant sovereign wealth - as well as fees, taxes, financial charges, and service revenues, which constitute the primary sources of non-oil government budget financing.

The framework also introduces proceeds from privatization and public-private partnerships (PPPs) as a distinct revenue category, aligning closely with the objectives of Saudi Vision 2030, which seeks to increase private sector participation in the national economy.

In addition, the system regulates revenues generated from state-owned assets through sales and leasing activities, financing and investment returns, as well as other sources including fines, penalties, compensation payments, donations, grants, bequests, endowment (waqf) income, zakat funds, and any additional revenue channels approved by the Cabinet.

Ten-Year Revenue Forecasting

One of the system's most significant structural reforms is its long-term forecasting approach, shifting budget estimation from annual planning to a broader strategic horizon.

The Ministry of Finance is now legally authorized to forecast government revenues for periods of up to ten fiscal years, relying on data, projections, and development plans submitted by various government entities.

The framework also provides flexibility for the Ministry to periodically review and revise these forecasts whenever significant domestic or international economic or financial developments occur, improving forecasting accuracy and reducing estimation gaps in the national budget.

The system further regulates revenue collection procedures by requiring government entities to collect revenues when due, record them within the relevant fiscal year, and transfer all collected revenues to the Ministry of Finance's account at the Saudi Central Bank according to timelines established in the implementing regulations.

Government Debt Collection

The system requires government entities to notify debtors on the first working day following the debt's due date. If payment is not made within 45 working days from the notification date, legal collection procedures must begin.

The legislation also introduces flexibility in handling government debts by allowing collection to be postponed for up to one year in exceptional circumstances. It affirms that government debts enjoy priority status and are not subject to statutory limitation periods.

Rules governing debt exemptions and installment arrangements have also been established. Debts not exceeding SAR1 million may be partially or fully waived under specific conditions, including verification that the debtor is genuinely unable to pay. Debts exceeding SAR1 million require approval from the Prime Minister based on the recommendation of the Minister of Finance.

The system also allows debts of up to SAR1 million to be repaid over periods of up to five years, while larger debts - or repayment terms exceeding five years - require approval from the Minister of Finance or an authorized delegate, with installment plans not exceeding 25 years.

The Saudi Cabinet was chaired by Crown Prince and Prime Minister Mohammed bin Salman on Tuesday. SPA

From Revenue Collection to Revenue Management

Experts interviewed by Asharq Al-Awsat described the new legislation as a major transformation in government resource management, shifting the focus from simply collecting revenues to establishing an integrated system covering forecasting, planning, collection, receivables management, and oversight, thereby strengthening public finance efficiency and supporting Saudi Arabia's fiscal sustainability objectives.

Dr. Abdullah Almeer, Assistant Professor of Economics at King Fahd University of Petroleum and Minerals, said the legislation represents a transition toward a more comprehensive model of government revenue management that begins with revenue forecasting and planning, continues through collection, and concludes with debt management and performance oversight.

He explained that the updated system shifts from a model focused primarily on revenue collection to one that manages the entire government revenue cycle - from estimation and planning to collection, debt management, receivables administration, and performance monitoring.

According to Almeer, one of the most significant reforms is the move toward strategic revenue management. While the previous system emphasized identifying revenue sources and collecting outstanding debts, the updated legislation introduces medium- and long-term financial planning.

He noted that allowing government entities to forecast revenues over ten-year periods - with periodic reassessments in response to economic changes - will improve revenue forecasting accuracy, enhance medium- and long-term budget preparation, and strengthen the government's ability to manage fiscal risks.

Improving Fiscal Efficiency

Almeer added that the new system is expected to improve financial efficiency by narrowing the gap between projected and actual revenues while enabling faster collection of government receivables immediately after they become due.

He noted that government entities are now required to participate in revenue forecasting and establish specialized revenue development units where needed, increasing accountability for financial resource management and improving collection efficiency.

Regarding non-oil revenues, Almeer expects the legislation to have a positive impact because it assigns government entities direct responsibility not only for collecting revenues but also for developing them.

He emphasized that increasing non-oil revenues depends not only on introducing new fees or revenue streams, but also on improving the management of existing revenues, strengthening collection mechanisms, and enhancing receivables management.

He also pointed out that government entities must now conduct studies and analyses before proposing any new fees, financial charges, or taxes, helping strike a balance between revenue growth and economic development.

Additionally, he observed that recognizing privatization proceeds as a separate revenue source is fully aligned with privatization and public-private partnership initiatives under Saudi Vision 2030.

Clearer Responsibilities and Stronger Governance

Financial and economic consultant Dr. Hussein Al-Attas described the updated legislation as a qualitative shift from revenue collection to integrated government revenue cycle management, covering revenue estimation, recording, monitoring, collection, and the treatment of overdue accounts.

According to Al-Attas, the system clearly defines the responsibilities of government entities and standardizes procedures, reducing inconsistencies in implementation while improving collection efficiency. He expects these reforms to enhance financial planning, reduce revenue leakage, and strengthen fiscal discipline.

He also stressed that strengthening non-oil revenues depends not only on creating new income sources but also on improving the management of existing revenue streams. Better collection procedures, reduced payment delays, and more effective management of government receivables will support sustainable revenue growth.

Al-Attas added that clearly defined responsibilities among government agencies improve transparency and accountability, facilitate performance measurement, and strengthen financial governance through standardized practices for revenue estimation, collection, and receivables management.

Greater Flexibility in Managing Government Debt

Regarding government debt management, Al-Attas said the legislation strikes a balance between improving collection efficiency and considering taxpayers' circumstances by allowing structured repayment plans and installment arrangements under clearly defined rules. These measures are expected to encourage voluntary compliance while reducing defaults and disputes.

He explained that the system also provides flexibility in exceptional cases by permitting temporary deferrals of collection, as well as partial or full debt waivers under specific conditions, including verification of a debtor's ability to repay before exemption decisions are made.

Al-Attas added that the new legislation represents a modern model for government revenue management by strengthening the state's ability to collect its financial rights, reducing the accumulation of public debts, preserving economic activity, and supporting the continued growth of Saudi Arabia's non-oil economy.



Norway's Sovereign Fund Proposes Deep Cuts to US Treasury Holdings

A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche
A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche
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Norway's Sovereign Fund Proposes Deep Cuts to US Treasury Holdings

A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche
A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche

The manager of Norway's $2.3 trillion sovereign wealth fund has proposed significantly cutting its exposure to US Treasuries as part of a wider shake-up of its bond investments to improve returns, according to a letter published this week.

Norges Bank Investment Management has recommended reducing its weighting to government bonds within its benchmark bond index to 50% from 70%, with US Treasuries, the biggest holding, getting the biggest cut, according to the letter.

The changes would mean cutting nearly $80 billion from the fund's current holdings of about $215 billion of US Treasuries as of the end of June, according to Reuters calculations.

Government bond markets have been under pressure recently, with long-term borrowing costs soaring as rising inflation and government debt levels spooked investors.

Norway's sovereign wealth fund, the world's largest, owns on average 1.5% of ⁠all listed companies ⁠globally. Its scale means that portfolio decisions can influence broader market flows. Any cuts to its bond holdings are unlikely to be implemented until several months into 2027 at the earliest.

The letter containing the fund's proposals was sent in response to questions from Norway's finance ministry about the wealth fund's investment strategy for bonds.

Norges Bank IM said it would await the ministry's response, and any changes would be done gradually to limit market impact and transaction costs.

The proposals will form part of recommendations to the ministry in January.

They will be discussed ⁠as part of the fund's annual white paper process next spring, after which the ministry will make a final recommendation to parliament which will then hold a hearing, a Norges Bank IM spokesperson said.

"We recommend that the government subindex of the bond index be reduced from 70% to 50%," Ida Wolden Bache, governor of Norges Bank, and Norges Bank IM CEO Nicolai Tangen wrote in the letter.

"A government share of 50% will be sufficient to cover the liquidity needs, including in periods of turbulence in financial markets."

The fund also proposed considering an increase in investments in unlisted assets in a separate letter, in part as a way to reduce concentration risks that have grown in its equity portfolio amid the boom in the share prices of a handful of US tech companies.

Under its current mandate the fund can own unlisted real estate and renewable energy assets, but it has a lower share of unlisted investments ⁠than comparable funds.

Norges Bank IM said the biggest change to its bond index would be investing in more non-government debt, including mortgage-backed securities, to give it better diversification and exposure to risk premiums.

The spokesperson said total US dollar exposure would remain around 50%, adding: "What changes is the mix inside the dollar market: less US government debt, correspondingly more US mortgage and government-related bonds."

Under the proposals, the bond index weighting to US government bonds would reduce from 34.1% to 21.9%, according to the letter, with the allocation to euro area debt falling more modestly from 16.8% to 14.1%.

The allocation to Japanese government bonds would increase from 4.6% to 7.4%, while the UK allocation would remain unchanged at 4.2%. The fund said the changes would align the index more closely with the broader market weightings.

While US Treasuries exposure would fall, the proposed allocation to US non-government debt would jump from 16.2% to 27.6%, meaning that the overall bond index's weighting to the US dollar would fall only slightly, from 52.9% to 52.5%.

Europe's biggest pension fund, Dutch fund ABP, cut the value of its own US Treasury holdings in the first quarter of this year, Reuters previously reported.


J.P. Morgan, BNP Paribas Forecast December ECB Rate Hike

FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
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J.P. Morgan, BNP Paribas Forecast December ECB Rate Hike

FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo

J.P. Morgan and BNP Paribas said on Thursday they expect the European Central Bank to deliver another 25-basis-point rate hike in December, as persistent inflation risks and elevated energy prices strengthen the case for further tightening.

Both brokerages had previously expected the ECB's tightening cycle to end without a December rate increase.

The revised outlooks suggest borrowing costs in the euro zone will remain elevated for longer than previously anticipated, reflecting resilient regional economic ⁠growth and ongoing energy ⁠supply concerns.

"We think the persistence of the energy shock and the resilience of the economy make second-round effects more likely to materialize," said analysts at BNP Paribas in a note.

Markets have almost fully priced in ⁠a 25-basis-point interest rate hike by the European Central Bank at its September 10 policy meeting, indicating a 99.2% probability, according to data compiled by LSEG.

Oil prices eased but remained above $95 a barrel. At the same time, eurozone bond yields retreated from multiyear highs, following recent market pressure as the escalating conflict in Iran boosted energy prices, stoking fears of persistent inflation and ⁠tighter ⁠monetary policy.

According to Reuters, J.P. Morgan said "an interaction between more persistent energy price pressures, solid growth, sticky core inflation and a neutral rate that the ECB sees edging higher" would be the reason for a further rate hike in December.

BNP Paribas expects the ECB to hike interest rates by 25 bps at its meeting next week while leaving the door wide open to delivering more if evidence of second-round effects builds.


US Sanctions Turkish Bank, 2 Subsidiaries to Pressure Iran

ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)
ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)
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US Sanctions Turkish Bank, 2 Subsidiaries to Pressure Iran

ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)
ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)

The US Treasury Department said on Friday it imposed new Iran-related sanctions on a small Turkish investment bank and two subsidiaries as part of the Trump administration's effort to increase economic pressure on Iran.

The entities targeted are Instanbul-based investment bank Golden Global Yatirim Bankasi Anonim Sirketi, asset manager Golden Global Portfoy Yonetimi Anonim Sirketi, and asset leasing company Golden Global Varlik Kiralama Anonim Sirketi, according to the Treasury's Office of Foreign Assets Control.

The sanctions put all three entities on the Treasury's OFAC Specially Designated Nationals list, cutting them off from the dollar-based financial system.

The Treasury Department also issued a general license to allow the wind-down of transactions with the sanctioned entities.

In an interview with news outlet America's Voice News, US Treasury Secretary Scott Bessent ⁠said that the ⁠latest action "is code for you are out of business."

"And we will probably sanction another bank next week, and we are telling the financial system bad actors: 'We know who you are, you know who you are, it's over, and our allies are helping with this," he said.

Golden Global Yatrim Bankasi is the 35th-largest bank in Turkey by total assets, according to database TheBanks.EU, with total assets of 25,024.68 million Turkish lira ($516.63 million) in 2025.

The bank did not immediately respond to a request for comment.

The Treasury said in a statement that Golden Global was established for the purpose of enabling Iran's shadow banking network to transfer oil revenues from China to Türkiye,
where it could then be converted to cash and gold by money exchangers.

The Treasury said that Golden Global has knowingly offered to provide correspondent banking services to Iranian financial institutions, enabling transactions through accounts controlled by the Iranian Revolutionary Guard Corps Qods Force and its proxies.

The action is the latest in the Trump administration's campaign to economically pressure Tehran six months into the US-Israel war with Iran, which has pushed energy prices higher worldwide.

Bessent, who last month announced an "economic onslaught" against Iran's financial links around the world, has said Washington is seeking to force Tehran back to the negotiating table.

Last week, Washington moved to impose Patriot Act curbs ⁠on Egyptian lender Banque Misr's ⁠branches in the United Arab Emirates from US dollar transactions over their dealings with Iran. But the action fell short of full OFAC sanctions on the institution that did not affect Misr's head office or branches elsewhere.

In an interview with Reuters on Sunday, Bessent said the Treasury Department was likely to roll out new secondary sanctions every week, initially focusing on banks, as part of a broader campaign to intensify economic pressure on Iran.