Fiscal reforms already underway in Saudi Arabia could save the Kingdom as much as SR362 billion ($97 billion) annually by 2020, leading to a surplus of SR162 billion ($43 billion) annually, according to a recent analysis by Jadwa Investment.
That amount is a significant increase as compared to if nothing was done to address Saudi Arabia’s fiscal situation. Without reforms, Saudi Arabia would have a fiscal deficit of SR200 billion ($53 billion) by 2020.
The initiatives in place for the Kingdom to achieve fiscal balance by 2020 include roadmaps designated for enhancing spending efficiency, reforming energy prices, and promoting non-oil revenue – all part of the Fiscal Balance Program (FBP 2020) and Saudi Arabia’s Vision 2030 economic and social reform plan.
According to Jadwa Investment, the Kingdom has already begun its course-correction. The Riyadh-based bank said in a report that it estimates that FBP 2020 initiatives will result in SR100 billion ($26 billion) worth of gross savings in 2017 alone.
“The reduction in public sector worker allowances and wage freeze will contribute to 55 percent of 2017 gross savings. A further 29 percent of these savings will come from energy price reform – whilst new measures to enhance the efficiency of spending and raise non-oil revenue will contribute 12 percent and 4 percent, respectively. That being said, we believe that the government has already incorporated these savings into the 2017 budget, and therefore are confident of government delivering on reforms.”