The International Monetary Fund (IMF) released a report saying the Saudi economy is experiencing growth and prosperity, the kingdom’s fiscal position is strong, and it expects the non-oil economy to maintain strong momentum.
The IMF praised Saudi Arabia’s progress in implementing its Saudi Vision 2030 reform agenda.
In a statement concluding the 2023 Article IV consultative discussions with the kingdom, the Fund praised the kingdom’s acceleration of digital transformation, increased participation of women in the labor market, reforms in the regulatory and business environment, and continued efforts to invest in human capital. , and continued growth in non-oil GDP.
The report praised the Kingdom’s continued efforts to complete economic and financial reforms and achieve Saudi Vision 2030 goals.
„Saudi Arabia was the fastest-growing G20 economy in 2022,” with a rate of 8.7 percent, and a non-oil GDP of about 4.8 percent.
With an unemployment rate of 8 percent, the report noted, „Saudi’s unemployment rate is at a historically low level.”
Saudi women’s participation in the labor market has reached around 37 percent (up from 18 percent in 2017), surpassing Saudi Vision 2030’s target of 30 percent.
The report welcomed national efforts to improve women’s contribution to supporting the national economy.
Additionally, the fund lauded the Kingdom’s efforts to control inflation, which has cast a shadow over the global economy.
„Average CPI is expected to increase by 2.5 percent in 2022, including domestic subsidies/price cap and a stronger US dollar. Headline inflation is back at 2.8 percent in May 2023, despite rising to 3.4 percent in early 2023.
The IMF emphasized that the continuation of the Vision 2030 reforms reflects progress in advancing the country’s economic diversification programs to reduce oil dependence.
It predicts a continuation of the strong pace of non-oil GDP growth, with average growth reaching 4.9 percent in 2023, driven by strong consumption spending and increased private investment through programs and projects to boost private sector growth. Accelerated program implementation will positively reflect non-oil GDP growth, the IMF said.
The report also welcomed ongoing reform efforts within the framework of the Fiscal Stability Program, including improving non-oil revenue, rationalizing expenditure and strengthening the public fiscal framework.
It lauded the significant improvement in public financial transparency through the expanded budget statement and other detailed reports, noting the low and stable debt levels and the existence of a strong fiscal space.
The IMF emphasized that the Kingdom’s monetary policy (fixed exchange rate) is appropriate and serves the Kingdom’s economy and the performance of the banking sector remains strong this year, thanks to the continued efforts of the Saudi Central Bank (SAMA). Regulatory and Oversight Structures.
This contributed to higher profitability ratios (higher than pre-pandemic levels) in addition to higher capital adequacy ratios and lower non-performing loan (NPL) ratios.
The report further welcomed the Saudi Central Bank’s efforts to promote Saudi Arabia as a fintech hub.
The report also commended the Kingdom’s government’s continued efforts to improve governance, fight corruption and address the challenges of climate change.
These initiatives are expected to contribute to projects implemented to increase renewable energy, the Kingdom’s goal to become the world’s largest producer of clean hydrogen, and the Saudi Green Initiative’s (SGI) commitment to reducing carbon emissions. Reducing emissions to target levels by 2030, marking the Kingdom’s second-lowest emissions per unit of output globally.
In addition, the report noted positive change in the Saudi housing sector through several plans to increase the percentage of home ownership to 60.6 percent by 2022, in pursuit of the Vision 2030 target of 70 percent by 2030.
It also emphasized the importance of industrial policies in the success of the Kingdom’s efforts towards structural transformation and diversification under Saudi Vision 2030.
Saudi Arabia’s digital transformation efforts are recognized, ranking high on global digitization metrics. Digital advancement has improved financial inclusion, financial sector resilience and government efficiency.
According to the IMF, Saudi Vision 2030 has been instrumental in accelerating the pace of digital transformation.
Commenting on the results of the International Monetary Fund’s report, Finance Minister Mohammed Al-Jadan welcomed the reforms Saudi Arabia’s economy has seen and praise for the Kingdom’s continued efforts to carry out economic and financial reforms.
He noted the Kingdom’s solid fiscal position and the progress it has made in transparency of public finances, in addition to its fiscal policies and reforms that support fiscal policy and mitigate risks.
Zadan noted that the report highlighted both current indicators and positive future prospects for the Saudi economy, as well as continued progress in implementing the Saudi Vision 2030 agenda and economic transformation.
The IMF emphasized the success of the Kingdom’s economy in facing challenges and maintaining financial stability, noting the key role of government-led economic and structural reforms that have contributed to improving its durability and strength, while noting that it has achieved sustainable and inclusive economic growth.
A concluding report was previously released by the International Monetary Fund’s staff mission following the conclusion of the Article IV consultation with the Kingdom’s government for 2023, and this new IMF report confirms the conclusions of the previous report.
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