IMF: Saudi Arabia's economic and financial situation is strong

The IMF issued a positive report on the kingdom of Saudi Arabia following the conclusion of the discussions of the Article IV consultations with the kingdom, during which it confirmed that the Saudi economy is witnessing a state of prosperity and growth, and that the kingdom's financial position is strong, praising the progress it has made in implementing the reform agenda of Saudi Vision 2030.

The fund also praised the accelerated pace of digital transformation in the Kingdom and the increased participation of women in the labor market, reforms in the regulatory and business environment, ongoing efforts to invest in human capital, and the continued growth of non-oil GDP.

The report praised the kingdom's continuous efforts to complete economic and financial reforms and achieve the goals of Saudi Vision 2030, noting that the kingdom was the fastest growing economy of the group of twenty in 2022 at a rate of 8.7%, with non-oil GDP growth of about 4.8%, and unemployment rates among Saudis fell to its lowest historical level; it fell to 8%, noting that the participation of Saudi women in the labor market reached a record level of about 37% (from 18% in 2017), exceeding the 30% target within the Saudi Vision 2030, the report also welcomed the ongoing national efforts to enhance women's contribution to supporting the national economy.

In addition, the report praised the kingdom's efforts to contain inflation, which cast a shadow on the global economy, explaining that it was contained through local support and setting a price ceiling for a number of products, and the strength of the US dollar, where the average consumer price index reached 2.5% in 2022, pointing out that although the average index rose in early 2023 to 3.4%, it fell back to 2.8% in May 2023.

The report stressed that the continuation of the reforms of Saudi Vision 2030 represents progress in pushing the country's economic diversification programs to reduce its dependence on oil, expecting the strong momentum of non-oil GDP growth to continue, and that its average growth will reach 4.9% in 2023, driven by strong consumer spending, increasing private investment through projects and programs that enhance the growth of the private sector, in addition to the accelerated pace of project implementation, which will reflect positively on the growth of non-oil GDP.

The report also welcomed the ongoing reform efforts under the fiscal sustainability program, including enhancing non-oil revenues, rationalizing spending and strengthening the public finance framework, noting the low and sustainable debt levels and the availability of strong fiscal space, praising the remarkable progress in the transparency of public finances through the expanded budget statement and other detailed reports.

He stressed that the monetary policy followed (fixed exchange rate) is appropriate and serves the kingdom's economy, and that the performance of the banking sector remains strong during the current year thanks to the continuous efforts of the Central Bank of Saudi Arabia (SAMA) to update regulatory and supervisory frameworks, which contributed to achieving high profitability ratios (higher than pre-pandemic levels), in addition to high capital adequacy ratios and low non-performing loans ratios, the report also welcomed the bank's efforts to strengthen the kingdom's position as a financial technology center.

In addition, the report praised the continuous measures and efforts exerted by the kingdom's government to strengthen governance, combat corruption, and face the challenges of climate change, as well as the plans to be implemented to increase renewable energy, the kingdom's goal to become the largest producer of clean hydrogen in the world, and the tangible role of the Saudi Green initiative in reducing carbon emissions, expecting these efforts to contribute to reducing emissions to the target level for 2030, pointing out that the Kingdom recorded the second lowest emissions per unit produced globally.

The report touched upon the positive transformation in the Saudi housing sector through a number of programs that contributed to raising the percentage of home ownership to 60.6% in 2022, in an effort to achieve the vision's goal of reaching 70% by 2030. He also pointed out the importance of industrial policies in the success of the kingdom's efforts for transformation and structural diversification within the Saudi Vision 2030.

With regard to digital transformation, the report pointed out that the kingdom ranks high in a number of global digitalization rankings, such as digital infrastructure and the maturity of Digital Government Transformation. The digital development in the kingdom has improved financial inclusion, the flexibility of the financial sector, and enhanced the effectiveness of the government sector, pointing out that the Saudi Vision 2030 has played a pivotal role in accelerating the pace of digital transformation.

Commenting on the results of the IMF's Article IV consultations with the government of the Kingdom, His Excellency the minister of Finance, Mr. Mohammed bin Abdullah Al-Jadaan, welcomed the fund's praise for the reforms witnessed by the Saudi economy and the kingdom's continuous efforts to carry out economic and financial reforms.he also noted in particular the fund's reference to the kingdom's solid financial position, and the progress it has achieved in public financial transparency, in addition to the financial policies and reforms it has adopted that have led to financial policy support and risk mitigation.

He pointed out that the report highlighted the current indicators and positive future prospects of the Saudi economy, and the continuous progress in implementing the Saudi Vision 2030 Agenda and economic transformation, stressing the success of the kingdom's economy in facing challenges and maintaining financial sustainability, which contributed to enhancing its strength and strength, noting the prominent role of the economic and structural reforms carried out by the government, which achieved sustainable and comprehensive economic growth.

It is noteworthy that a final statement was issued by the IMF experts mission following the conclusion of the Article IV consultations with the government of the kingdom for 2023, and this report confirms the findings of the previous statement.