RIYADH — Saudi Arabia is set to spend SR1.02 trillion ($272 billion) in 2020 as the Kingdom’s economic and social reform agenda accelerates.
The budget predicts revenue of SR833 billion and a deficit of SR187 billion.
Custodian of the Two Holy Mosques King Salman announced the figures at a Cabinet meeting on Monday in Riyadh.
Finance Minister Mohammed Al-Jadaan said that while spending next year would be less than the current year, the government would continue its focus on developing the private sector.
“We will continue to support big projects and will continue to support promising projects,” he said. “Enabling the private sector is the top priority of Vision 2030.”
The budget takes place against a backdrop of quickening reforms and a number of key events from the $1.7 trillion initial public offering of Saudi Aramco, the world’s biggest share sale, to the creation of fast track tourism visas.
The finance ministry hosted a visit of international investors to coincide with this year’s budget announcement which included a trip to the Al-Turaif UNESCO heritage site, one of a number of sites around the Kingdom that are attracting investment as it opens up to overseas tourists.
While reducing the Kingdom’s dependence on oil revenues is a key part of the Vision 2030 reform agenda, the commodity remains the principal driver of spending trends for both Saudi Arabia and other Arabian Gulf oil-exporting nations.
The current year saw the country improving its business environment, as recognized in the World Bank Ease of Doing Business Report 2020 where the Kingdom was the top reformer globally and moved 30 places up to 62nd. About 62 percent of the 300 planned reforms in this area were completed, including a new government tenders and procurement law, new commercial courts, a new competition law and planned public private partnership laws.
The government will continue to enhance the efficiency of expenditure, both for operational and capital expenditure. These efforts seek to increase the quality of public services, and their economic and social returns throughout the medium term. The budget continues its focus on the education and health sectors. The budget allocation for the health sector reaches SR167 billion, whereas SR193 billion is allocated for the education sector, amounting to a combined 35 percent of the approved total spending.
Finance Minister Al-Jadaan said: “The budget demonstrates the government’s keenness to enhance and sustain economic growth while ensuring fiscal sustainability. We have adopted economic policies that target the growth of non-oil GDP, improving the quality of services provided to our citizens, and raising the efficiency and effectiveness of government spending, especially social spending. Simultaneously, the government continues its steadfast commitment to empowering the private sector’s role in the economy, job creation and diversification of investment under the umbrella of Saudi Vision 2030 objectives.”
He also noted that the 2020 budget statement shows notable growth in various economic sectors during 2019, including a growth rate in private non-oil GDP of 3.4 percent during the second quarter of the year. He also emphasized that the government will continue the implementation of its strategic objectives, aimed at economic diversification, by establishing a suitable environment for investment in promising sectors while providing a stable economic framework.
The medium-term revision of real GDP growth rate projections has indicated real GDP growth of 2.3 percent in 2020. Growth is expected to continue at the same pace over the medium term.
The minister reiterated that the 22 private sector support initiatives targeting strategic sectors are bearing fruit in second quarter sector growth numbers. The sector of wholesale and retail trade, restaurants and hotels grew by 5.8 percent. The sector of transportation, storage and communications, which includes logistics and technical services, recorded a growth rate of 6.4 percent. In the sector of financial services, insurance and real estate, the growth rate was 5.4 percent. The sector of community, social and personal services sector including entertainment & sport, recorded growth of 7.4 percent. In addition, the construction sector has recorded a growth rate of 4.9 percent.