Saudi Arabia has published a new report highlighting its goals to achieve a fiscal balance by the year 2020.
The 85-page report, which places the goal in the context of the Kingdom’s ongoing economic transformation plans, is the first of its kind since Saudi Arabia published its Vision 2030 and National Transformation Program overviews earlier this year. The report is titled the Fiscal Balance Program: Balanced Budget 2020 and is noted to be a program that fits within the Vision 2030 strategy.
“As one of the Executive Programs announced in the Vision, the Fiscal Balance Program will be a key component in developing a more effective government, by providing intense scrutiny of government finances and acting as a spur to increased efficiency,” the Kingdom said in the introduction to the document. “Beyond fiscal balance and government performance, this program contributes to key socioeconomic impacts sought by Vision 2030. This includes targeting the social welfare system on the neediest and supporting them effectively, and also making our economy more competitive. Most importantly, by carefully managing the government’s finances, space can be created in the budget to enable investment in the long term programs that will ensure a successful delivery of the Vision.
Saudi authorities face tough choices but inaction would lead to greater economic hardship.
“Furthermore, such reform secures confidence in the Kingdom for citizens, residents , local and foreign investors, international financial institutions and markets, so everyone can contribute to this ambitious journey. This document sets out the context and rational for the Fiscal Balance Program; and it details its main components, together with the projected fiscal impact.”
The document is a thorough look at the Kingdom’s economic situation and outlines the stark choices required of the government to avoid serious problems related to spending and revenue in the wake of a period of low oil prices.
“In light of such challenges and potential consequences, and as part of a wider fiscal reform, the government is embarking a Fiscal Balance Program with a main objective of achieving fiscal balance by 2020,” the Report says.
The Fiscal Balance Program is anchored on the following themes:
»Enhancing sustainability of government revenues, by growing non oil revenues.
»Optimization and rationalization of government capital and operational expenditures, while focusing spending on the most strategic areas
»Eliminating misdirected subsidies, and empowering citizens to choose and consume responsibly
» Sustaining economic growth in the private sector.
