Saudi Arabia is making good progress in implementing Vision 2030 economic and social reforms, the International Monetary Fund (IMF) said in a statement late on Tuesday, as it urged the Kingdom not to increase spending and to focus on a balanced budget by 2023.
“The government remains committed to wide-ranging economic and social reforms to transform the economy away from its traditional reliance on oil and to create a more dynamic private sector that creates jobs for the growing working-age population,” Tim Callen, head of an IMF team which held talks with Saudi officials over 12 days this month, said in a statement late on Tuesday as reported in Reuters.
Callen predicted economic growth would start picking up this year, after Saudi Arabia’s GDP shrank last year for the first time since 2009.
The IMF also called on the world’s top oil exporter to continue “bold structural changes” but to also said the primary challenges were “sustaining the implementation of reforms, achieve the fiscal targets it has set, and resist the temptation to re-expand government spending in line with higher oil prices.”
The IMF also called the introduction of the VAT a “milestone achievement in strengthening the tax culture and tax administration of the country” and recommended that “further gradual energy price increases should continue, while the citizens’ accounts should be reviewed periodically to confirm they are adequately compensating low and middle-income households for the higher energy/VAT costs.”