The estimated financial surplus announced by the Saudi government on Sunday highlighted features of financial sustainability in the 2022 budget, supported by the economic reforms undertaken by the Kingdom.
In remarks on Sunday, Saudi Finance Minister Mohammed al-Jadaan revealed a financial surplus of 90 billion riyals ($24 billion) with an estimated revenue of 1045 million riyals ($278.6 billion), and expenditures of 955 billion riyals ($254.6 billion) for the 2022 budget.
The Saudi government was able to develop medium-term financial planning, which contributed to the establishment of tools capable of influencing and interacting with financial and economic variables, and enhancing financial control.
During the 2022 budget forum on Monday, ministers and officials in the Saudi public agencies revealed the latest developments in the economic sectors and the most important results of financial sustainability, transformation and development in services, as well as possibilities for private sector growth and future prospects.
Government Spending
The Minister of Finance explained that the government spending process over the past 25 years has witnessed great fluctuations, as it kept pace with oil prices.
This has brought about great challenges in project planning and the ability of the private sector to predict the economic trend in general, the minister said, adding that the government was forced to make specific decisions as a result of declines in revenues and to use budget surpluses to achieve short-term gains that are not useful on the medium and long run.
Al-Jadaan revealed that at the beginning of launching Vision 2030, the budget deficit was about 12.9 percent, noting that the government was able, through the fiscal balance program and the general budget control, to control spending, raise efficiency and reduce the deficit to 2.7 percent during the current year.
Financial Sustainability
Al-Jadaan indicated that despite achieving surpluses, the government committed to the previously announced spending levels, and separated annual revenue levels from its medium-term plans, thus creating a good level of maturity in public finance and planning.
“Surpluses in the general budget are used to enhance reserves until they reach their ceilings with the approval of a mechanism for their distribution, in addition to strengthening reserves and supporting the National Development Fund, which enables and finances the private sector in its projects and supports investments through the Saudi sovereign fund,” the minister explained.
Economic Transformation
For his part, Governor of the Public Investment Fund Yasir Al-Rumayyan said that Saudi Arabia was able, despite global economic challenges, to continue to implement the objectives of Vision 2030, push the wheel of national development forward and contribute to achieving financial balance. The Fund has a key role in supporting the process of transformation and diversification of the national economy, he underlined.
Development Contracts
Al-Rumayyan noted that a group of companies affiliated with the Fund signed development contracts worth more than 13 billion riyals ($3.4 billion), representing more than 70 percent of the value of the contracts of the Red Sea Development Company. Moreover, ROSHN Real Estate signed strategic partnerships with a group of Saudi companies to develop the first phase of a major project in Riyadh.
He added that the Local Content Development Program aims to increase to 60 percent the contribution of the Fund and its subsidiaries to the local content during 2025, by expanding opportunities for local companies, stimulating local suppliers, increasing the localization of imported goods and services, and opening up prospects for investment opportunities to improve local supply chains.
Stimulating The Private Sector
For his part, Deputy Chairman of the Board of Directors of the National Development Fund, Muhammad Al-Tuwaijri, stressed that the Fund seeks to stimulate and develop the private sector, pointing to the establishment of an infrastructure fund that serves the local and international private sector.
Other key topics addressed by the Saudi officials at the Budget Forum included infrastructure, tourism, logistic services, industry and mining and sports revenues.
