Saudi Arabia Announces Budget 2022, with a Focus on Service Improvement, Fiscal Sustainability and Private Sector Empowerment
PR93647
RIYADH, Saudi Arabia, December 13, 2021 /PRNewswire=KYODO JBN/ --
The Council of Ministers, in its session held today,12 December 2021, under
the chairmanship of the Custodian of the Two Holy Mosques, King Salman bin
Abdulaziz approved the budget for the fiscal year 2022, with a total
expenditure of SAR 955 billion, total revenues of about SAR 1,045 billion, and
a surplus of about SAR 90 billion.
On this occasion, His Excellency the Minister of Finance Mr. Mohammed
Al-Jadaan, extended his thanks and gratitude to the Custodian of the Two Holy
Mosques, King Salman bin Abdulaziz, and HRH the Crown Prince, Deputy Prime
Minister and Minister of Defense, Prince Mohammed bin Salman bin Abdulaziz for
approving the budget. Mr. Al-Jadaan pointed out that the government's
responsible policies and procedures in addressing COVID-19 pandemic have
managed to contain its humanitarian, financial, and economic impact by
providing strong support to the health and private sectors, while maintaining
fiscal sustainability for the medium- and long-terms. His Excellency indicated
that such policies have had a positive impact on the gradual recovery of the
local economy showing a fast-paced growth in several areas.
Al-Jadaan pointed out that budget 2022 reflects the government's
determination to promote post-pandemic economic growth, and to allocate
resources on health, education and the development of core services, in
addition to the continuation of social support and benefits. Al-Jadaan
indicated that the budget comes as part of the reform process to develop the
management of public finances while maintaining the previously-announced
spending ceilings in a manner that ensures fiscal sustainability in the medium
term and a strong financial position that enables the state to respond to any
emergency changes and absorb unexpected economic shocks.
Al-Jadaan stated that the budget estimates for the FY 2022 show that total
revenues will reach SAR 1,045 billion, an increase of 12.4% compared to the
projected revenues in 2021. Total expenditures are estimated at around SAR 955
billion, with SAR 90 billion in surplus (2.5% of GDP). These surpluses will be
directed to boost government reserves, support national development funds and
the Public Investment Fund, consider the possibility of accelerating the
implementation of some strategic programs and projects with economic and social
dimensions, or to partially repay the public debt based on market conditions.
On public debt, His Excellency explained that the public debt indicators are
expected to improve in 2022, declining to around 25.9% of GDP, down from 29.2%
in 2021, as a result of expectations of budget surplus and GDP growth, provided
that borrowings are used to repay the debt principal that is due to be repaid
in the future, or to capitalize on favorable market opportunities to support
reserves or fund capital projects that can be accelerated through annual
issuances. He also stated that the debt-to-GDP ratio is expected to remain at
appropriate levels in 2024 reaching 25.4%. He added that the government is
working on developing a risk management framework that aims to follow and
monitor the key developments in the local and global economy to identify the
risks arising from them, and then evaluate their consequences.
Al-Jadaan indicated that the government's target for FY 2022 and the medium
term is to support the ongoing gradual recovery in economic activity, while
maintaining the initiatives that have been in place in recent years, in
addition to upholding the commitment to achieving the goals of Saudi Vision
2030 by reducing the primary reliance on oil revenues, diversifying the
economy, and developing non-oil revenues and ensuring their sustainability. His
Excellency highlighted the progress made, during the last period, in
implementing the Vision Realization Programs and the mega projects, as well as
investment projects in various sectors, including infrastructure projects.
The Minister of Finance highlighted that the Kingdom is witnessing ongoing
economic growth supported by the economic enablers directed to the private
sector. The most important of which are the effective development contribution
made through the projects and programs of the Public Investment Fund and the
National Development Fund, the progress in the implementation of the National
Industrial Development and Logistics Program (NDLP), the National Investment
Strategy, the "Shareek" Program, the Financial Sector Development Program, and
privatization program. He emphasized that the success of these enablers will
reflect positively on public finances by stimulating and diversifying economic
growth, thereby improving non-oil revenues and reducing the burden on the
government spending, particularly, with the private sector leading investment
and employment.
The Minister underlined the significant increase in activity performance
indicators until the end of Q3 2021, which reflects the progressive recovery
paired with a rapid increase in COVID-19 immunization rates. This contributed
to the further easing of the precautionary measures in the Kingdom. He
explained that preliminary estimates for 2021 indicate a 2.9% growth in real
GDP, driven by a rise in non-oil GDP, which is expected to record a growth of
4.8%. Estimates for the FY 2022 indicate a 7.4% growth in real GDP, driven by
the increase in oil GDP as per the OPEC+ Agreement, in addition to the expected
improvement in non-oil GDP with the continued recovery of the economy and the
implementation of the initiatives and programs that enhance economic growth and
diversification.
On Fiscal Sustainability Program, His Excellency explained that the gains
and fundamental transformations in the management of public finances approach
over the past period entailed shifting from the fiscal balance phase to a phase
that seeks maintaining fiscal sustainability through effective planning tools
that are mindful of spending requirements over a longer period of time. Helpful
in protecting this planning and the ability to perform the spending planned in
the medium-term is reducing the linkage to external factors, including
fluctuations in the oil markets, so as not to cause confusion to those plans.
The program is expected to achieve several economic benefits, as it will
contribute to the continuation of the achievement of stable growth rates in the
non-oil economy, mitigate the effect of energy price volatility on the economy,
in addition to the enhancement of the private sector's ability to plan
investments with clarity. On public finances, the program will contribute to
the enhancement of the effectiveness of fiscal planning, raising the efficiency
of government spending, utilizing budget surpluses in boosting reserves or in
investment spending that ensures the diversification of the economy and
achieves the sustainable growth objectives in the medium- and long-terms.
In conclusion of his statement, His Excellency explained that the budget
2022 is the culmination of planning and collaboration across various government
entities. Efforts have been made, capabilities have been harnessed, and energy
has been channeled in order to develop this budget in a proper manner, through
which the budget can meet its strategic objectives and be presented in the
highest levels of transparency and clarity. These efforts are underpinned by
the government's direct commitment regarding the current financial and economic
situation through issuing budget-related reports, such as: the quarterly,
semi-annual and annual reports, as well as the pre-budget statement, budget
statement and the Citizen's Copy, all in accordance with the Saudi Vision 2030.
Source: Saudi Ministry of Finance
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