PR90542

RIYADH, Saudi Arabia, July 9, 2021 /PRNewswire=KYODO JBN/ --

IMF staff have reaffirmed the continued recovery of the Saudi economy and the

slowdown of the inflation of the Consumer Price Index (CPI), stating that they

project the non-oil GDP growth will reach 4.3% this year and 3.6 % in 2022. IMF

expects that the private sector will lead the growth this year to reach 5.8%,

and it will continue in the medium and long term with an average growth of

4.8%. This statement was in the Concluding of the 2021 Article IV consultation,

which was released recently. The staff commended the Saudi government's swift

and decisive response to Covid-19 Pandemic, and the early creation of a Supreme

Crisis Committee to manage and coordinate the efforts between government

agencies, along with the ambitious reforms that were being implemented earlier

within the framework of the Saudi Vision 2030 played an instrumental role in

helping the Saudi economy overcome the pandemic, the growing digitization of

government and financial services, reforms to increase labor market mobility,

and strong policy buffers all meant the economy was well equipped to manage the

COVID crisis. Moreover, the Private Sector Financing Support Program," launched

by the Saudi Central Bank, contributed to supporting SMEs in facing the

challenges of the pandemic.

The IMF staff reaffirmed also that the policies to support the non-oil economy

have been successful, that the creation of the High-Level Crisis Response

Committee" was central to effectively and pro-actively managing the crisis, and

that strict early containment and health mitigation measures limited cases and

fatalities.

On the current economic performance, the staff believe that the "Shareek"

partnership program will offer incentives through the tax system, access to

credit, and regulatory reforms to encourage investment. Moreover, they believe

that the labor market reforms (cancelation of Kafala sponsorship system) will

result in a more competitive labor market that is more attractive to higher

skilled expatriates. On the ongoing reforms to boost female employment, the

staff project a continued rise in female labor force participation rates

(increased by 13 percentage points to over 33 percent over the past two

years.). The staff also projected that the credit to the private sector will

grow strongly, boosted by lending for housing and to SMEs. The staff project

the new social security law to be an important step to strengthen the framework

for providing income support to the less well off.

The IMF staff indicated that the potential of renewable energy in Saudi Arabia

is huge and that it will attract domestic and foreign private investors. The

staff welcomed the high-level announcement of the Saudi Climate Strategy and

the commitment from the leadership of the country to reducing GHG emissions.

On public finance and transparency, the IMF staff confirmed that significant

progress has been made recently to increase accountability and transparency in

public procurement, including through "Etimad Platform". They commended the

impressive pace of capital market reforms to increase liquidity and depth to

local equity and bond markets including giving greater access to foreign

investors and introducing financial derivatives products. The staff pointed out

that the Banking system liquidity is at very comfortable levels.

The Concluding Statement of the 2021 Article IV consultation touched on

financial inclusion and fintech, indicating that the fintech sector in Saudi

Arabia is maturing rapidly with support from SAMA and the CMA. The Concluding

Statement pointed out that the peg remains the best exchange rate option, as

Saudi has high reserves that are more than adequate to maintain the peg.

His Excellency the Minister of Finance, Mr. Mohammed Al-Jadaan, said that the

Concluding Statement highlighted the current and future indicators of the Saudi

economy and that it succeeded in overcoming many of the obstacles and

challenges that the world underwent this year and last year. This contributed

to achieving the financial sustainability that enhanced the economy's

robustness and strength. His Excellency stressed the instrumental role of the

economic and structural reforms that the Saudi government implemented under the

Saudi Vision 2030 and the effect they had in achieving a sustainable and

comprehensive economy. The IMF staff also commended the Kingdom's efforts to

mitigate the economic, social, and health effects of Covid-19 Pandemic.

It is notable that the IMF staff mission has issued previously a statement at

the conclusion of the 2021 Article IV consultation for the Kingdom of Saudi

Arabia, which was held during April of 2021. This Concluding Statements affirms

the initial results that the previous statement reached.

SOURCE  Saudi Ministry of Finance