RIYADH, Nov 1 (KUNA) — The 2016 Saudi projected state budget is a step forward towards the materialization of much over-due plans to diversify national economy away from oil and to deal with new economic developments, Saudi economists have concurred.
The 2016 budget reflects the new economic policy, which aims to boost the national economy efficiency through cutting imports and increasing exports, Member of the Economic and Social Affairs Committee at the Saudi Shura Council Dr. Mansour Bin Al-Kreidees told KUNA.
Al-Kreidees also lauded the economic and development council’s decision to form two committees: one to mull all necessary measures to create job openings and the other to promote entrepreneurship and offer support to small and medium-sized enterprises.
Saudi Arabia on Monday unveiled a SR-840-billion budget, launching a phase in which the Kingdom hopes to further diversify its revenues in an era of low oil prices.
Next year’s budget projected spending of SR 840 billion; down from SR 975 billion actually spent this year. The 2016 budget plan aims to cut deficit from SR 367 billion (USD 97.9 billion) or 15 percent of gross domestic product in 2015 that to SR 326 billion or (USD 87 billion).
Economic expert and former member at the Saudi supreme economic council Dr. Mohammad Al-Sabban told KUNA that the budget deficit in 2015 was lower than expected and is projected to shrink more in 2016. To address the budget deficit, the government has to cement accountability, up the fight against corruption and public fund squandering, he argued.
He stated that full transparency is required while introducing tough economic reforms which would hit many segments of the society.
Al-Sabban described the government decision to raise fuel and electricity prices as a reasonable and gradual move that aims to reduce the deficit and protecting low-income people or national industries. Prioritizing government spending and bolstering of non-petroleum revenues would be the main features in the coming Saudi budgets regardless of the price of oil, he expounded.
He underlined the need for accelerating the privatization of some public sectors to ameliorate its efficiency and productivity.
Meanwhile, Dr. Khalid Al-Sweilem, former Chief Counselor and Director General of Investment at the Saudi Arabian Monetary Agency (SAMA), said in statements to KUNA that the approach adopted in outlining the new budget goes in harmony with the new policies of the Saudi Economic and Development Council.
He argued that the new approach represents a quantum leap in the process involved all government agencies not only by the Finance Ministry as usual.
Al-Sweilem viewed that the main challenge facing economic and financial decision-makers in the Kingdom is the over reliance on oil revenues, especially in securing foreign currency.
High hopes are pinned on the Kingdom’s plans to optimizing the use of the government investment and sovereign funds to secure foreign currency through boosting investments abroad, he added.
Economist Muna Al-Manjoomi confirmed that the projected budget deficit, estimated at USD 87 billion, is significantly lower than that expected by international financial institutions, about US 106.6 to 120 billion.
The Kingdom has no problem meet the deficit through the issuance of treasury bills and bonds or the withdrawing of the huge reserves, she told KUNA.
Al-Manjoomi said that the country has managed to up non-oil revenues to nearly 27 percent of the state revenues in 2015.
She expected that this figure would jump remarkably in 2016. She added that the 2016 budget also showed that the spending on development projects would not be affected by the sharp decline in oil prices.