Despite the great challenges facing the national economy this year as a result of the decline in oil revenues, Saudi Arabia has approved a new system for announcing budget results every three months in order to enhance transparency, raise performance efficiency, and reduce financial waste, one of the most prominent features of which was the implementation of projects at a cost of more than 25%. %.
On the occasion of the National Day, the Kingdom is keen to maintain good spending rates to ensure liquidity in the market, and to maintain previous performance rates.
One of the most prominent features of achieving this is the growth rate that exceeds 3%. Therefore, the 2017 budget was estimated at about 890 billion riyals in expenditures, compared to about 692 billion riyals in revenues.
The results of the budget in the second half showed a number of indicators, including a decline in the deficit to 72 billion riyals, and the volume of revenues amounted to 308 billion riyals, compared to expenses of 380 billion riyals. With only 140 billion riyals.
With this ratio, the budget deficit decreased from 367 billion riyals in 2015 to 298 billion riyals last year.
Accompanying indicators of improvement in the treatment of the budget deficit was a qualitative development in non-oil revenues, which are expected to be recorded at the end of this year at about 207 billion riyals, in addition to oil revenues approaching 500 billion riyals.
Diversifying the production base
In fact, the results achieved could not have been achieved without the directives of the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, and His Highness the Crown Prince, His Royal Highness Prince Muhammad bin Salman, who is behind the plan for the radical transformation of the Saudi economy now thanks to Vision 2030, which focuses on diversifying the base. Productivity, reducing dependence on oil, expanding the privatization program, raising the capacity of the national workforce, and supporting industry as a basic pillar for economic advancement.
When His Highness, Crown Prince Mohammed bin Salman launched Vision 2030, he stressed the importance of transparency and clarity of structural reforms in the arteries of the economy for better performance, and therefore the decision was to announce the results of the budget every three months to identify the areas of improvement and build on them and quickly avoid the negatives.
It was logical that many programs accompany the budget in order to achieve balance and bridge the deficit that emerged from the second half of 2014 until now.
It suffices to point out that oil revenues, which exceeded one trillion riyals in 2012 and 2013, have declined to 500 billion riyals during the current year. This reinforces the importance of the steps being taken to bridge the deficit and raise performance levels in professional ways.
Among the measures taken was the establishment of the Capital and Operational Expenditure Office; With the aim of identifying imbalances and financial waste, and one of its results was reviewing budget projects and providing 80 billion riyals for the state treasury during the past year, and 17 billion riyals in the first quarter of this year, in addition to reducing the budget deficit to 72 billion riyals in the first half of this year. ; This indicates an improvement in performance and the tendency to reduce the deficit to between 140-150 billion riyals only, compared to expected figures of up to 200 billion riyals when preparing the budget in December last year.
Providing profitable sources of income
One of the results of the establishment of the office is the Kingdom's keenness to diversify measures that support bridging the deficit by resorting to international and local markets and using cash reserves. For financial institutions in the long term, what happened in the last July and August issues reached four times the target thanks to the high return compared to the global markets.
The Kingdom is currently working to reduce the budget deficit and reach the stage of balance in 2020, and in this regard, an increase in non-oil revenues of 80 billion riyals is expected next year, and non-oil revenues will reach 530 billion riyals in 2020, and rise to one trillion riyals in 2030, greatly reducing the need for oil revenues.
It was not surprising that the Council of Economic and Development Affairs raised the performance by canceling low-feasibility projects, which were estimated at more than one trillion riyals and would have been a significant burden if implemented.
The Council approved a new vision that prioritizes high-feasibility and ready-made projects, which will have a rapid impact on the life of the citizen. To be completed quickly so as to have a rapid and effective impact on the standard of living of the citizen.
Bypassing the bottleneck stage
A good result of the budgetary performance was the retroactive reinstatement of allowances taken from staff following the improvement in oil prices. It is expected that its prices will witness a qualitative change by the end of the second half of this year, with the decline in oil stocks, which currently exceed 250 million barrels, according to the most modest studies.
It is also expected that the budget deficit will decrease by about 40 billion riyals at least, and the Kingdom has successfully passed the bottleneck stage in 2015 and 2016, and is heading very quickly to the equilibrium stage in 2020, amid calls for this to be compatible with the continuation of economic activity and maintaining good rates. For liquidity by supporting capital spending to reach previous levels at around 260 billion riyals.
It remains necessary to point out the many indications that the wise leadership focuses on in the budget, at the forefront of which is the strengthening of spending on the health and education sectors, as they are the cornerstone of any development projects.
According to the figures announced during the current year, spending on health is more than 60 billion riyals, and education and training is about 191 billion riyals, which represents more than 25% of the budget.
A celebration of contrast and structural transformation
For his part, a member of the Shura Council, Dr. Abdulelah Saati, told Okaz: “The celebration of the National Day during the current year takes a different turn, under the leadership of the Custodian of the Two Holy Mosques King Salman bin Abdulaziz and His Highness the Crown Prince, by bringing about a structural transformation in the Saudi economy.” Present and future generations will remember him with much gratitude for the leadership that took the decision under very difficult circumstances, one of the most prominent features of which is the decline in oil prices and the difficulty of shifting towards an economy based on different pillars away from oil.
He added: «This decision was important to face the significant decrease in the budget that depends on oil revenues by 85% in 2014, and the situation is exacerbated if we take into account that the entire revenues in 2015 did not exceed 520 billion riyals, and accordingly it was expected that a large financial deficit would emerge. Had it not been for the prompt and rational intervention of the leadership; Which led to reducing the budget deficit to only 367 billion riyals, and many steps followed that led to the continued decline of the deficit to less than 200 billion riyals during the current year.
For his part, economist Dr. Louay Al-Tayyar told Okaz that the Saudi budget is heading towards balance in the next stage, thanks to the good performance of controlling spending, expanding rationalization, and increasing non-governmental revenues.
He noted the privatization program, which includes 16 different sectors; This will ease the financial burden on the government and raise the quality of performance.
He pointed out that the pillars of the budget are the diversification of revenues, which are expected to witness an increase of 80 billion riyals next year, away from oil from value-added tax fees and others.
He stated that despite the importance of diversification, the coming period will remain full of challenges in light of the ambiguity surrounding oil prices at the current stage.
They were shared in the economic opinion by Dr. Abdulaziz Daghestani, who confirmed to Okaz that there are several advantages in the new budget, the first of which is transparency, clarity, information richness, and simplicity in offering.
He continued by saying, "The second issue is the clarity of future directions, fees and taxes that will be announced within three years at least, and this would provide an economic reading for the private sector about the demands in the next stage to have a greater role through privatization."
He added, "Industry is the primary option for the Saudi economy, as it becomes more capable of keeping pace with the various changes of the era."
He called for enhancing transparency in the next stage, and building on the achievements made, and the priority should be to solve the main problems, most notably unemployment, housing and support for the employment of Saudis in the private sector.
Saleh Al-Zahrani (Jeddah) @saleh5977
