Saudi Arabia postponed some of its projects that it launched within “Vision 2030” as part of its economic transformation plan, “in its first acknowledgment of changing the timetable to achieve the goals of the program, which is worth several trillion dollars,” according to the agency. Bloomberg.
Finance Minister Mohammed Al-Jadaan said on Thursday that the government, which expects a budget deficit every year until 2026, decided to postpone to avoid pressures related to inflation and supply problems.
Al-Jadaan did not specify the projects that would be affected by this postponement.
Al-Jadaan said in Riyadh that a longer period is needed “to build factories, and sufficient resources,” and added that “delaying some projects, or rather extending them, will serve the economy.”
The same minister told reporters on Wednesday that after determining the size of the borrowing approved by the government, it then returned to review the timetable for some projects.
Crown Prince Mohammed bin Salman’s “Vision 2030” initiative, which was first unveiled in 2016, aims to diversify the oil-dependent economy and attract foreign investment.
The government has long touted progress made in areas ranging from tourism and manufacturing to digitalization and the integration of women into the labor market.
But the costs are rising for an economy that still relies on energy to provide the bulk of government revenue.
After achieving its first budget surplus in nearly a decade last year, the kingdom revised its medium-term fiscal plans and shifted to forecasting deficits for years to come while accelerating spending.
Change the schedule
Al-Jadaan said, “There are strategies that have been postponed, and there are strategies that will be funded after 2030.”
The International Monetary Fund said last October that Saudi Arabia would need a price close to $86 per barrel to balance its budget, which is higher than its average this year.
Al-Jadaan warned that implementing the plans “in a short period of time” would threaten to stoke inflation and put pressure on Saudi Arabia to mobilize the necessary resources.
“Some projects can be extended for three years – until 2033 – while others will be extended until 2035, and others will be extended even beyond that,” he said.
Al-Jadaan said that the Kingdom expected oil and non-oil revenues until 2030, in addition to the amount of spending required to implement the plans it announced.
Figures revealed by the Finance Ministry this week showed it expects public debt to reach nearly 26% of economic output by the end of 2024 – a relatively low level by global standards but more than a percentage point higher than this year.
The Saudi government is also reviewing spending plans and looking for ways to reduce budgets when necessary.
This year alone, about 225 billion riyals ($60 billion) were saved and reused to implement projects, programs and other strategies, according to Al-Jadaan.
He said, “Improving spending is not just about reducing spending. It is about the best way to use resources in order to achieve optimal returns.”
Since Prince Mohammed bin Salman (37 years old) assumed the throne in 2017, the Kingdom, which remained closed for decades, has witnessed a widespread and unprecedented social and economic openness.
It is spending lavishly as part of a strategy to develop its infrastructure and improve its image, building new tourist facilities on the Red Sea coast and the future city of NEOM worth $500 billion, in addition to hosting sports and entertainment events featuring the elite of world stars.
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2023-12-07 12:32:56
