Asharqia Chamber's report that issued on Wednesday, December 19, 2018 on the budget of the new fiscal year 1440-1441 (2019) confirmed that the budget carried many signals about the interest of the wise leadership in achieving the national options that were adopted by the Vision of the Kingdom of 2030.
It reflected the seriousness of the Kingdom in achieving its goals and development aspirations, diversifying sources of income, building reserves, attracting foreign investments, expanding and developing infrastructure projects for the Saudi economy, the transition to a knowledge economy, the development of human elements, and giving the priority to services that affect the Saudi citizens directly.
Four axes
The report, which came in four integrated axes, said that the indicators of the budget of 2019 reflect the seriousness of the Kingdom in achieving its objectives and development aspirations, improving the capabilities of its competitive economy, development of non-oil revenues, and the introduction of new revenue sources for financial stability.
Therefore, it is estimated that the total revenue is about 975 billion riyals, an increase of 9% over the expected in 2018.
It is expected to reach 1042 billion riyals in 2021, with an annual growth rate of 5.3%, where it is expected to record the proceeds of taxes 183 billion riyals in 2019 with a growth rate of 10.8% compared to 2018 that to reach 201 billion riyals in 2021.
Productive sectors
It pointed out that the budget had borne many positive effects on the development of the efficient performance of productive sectors, including the private sector, which is a key partner in the process of construction and modernization that is witnessed by various regions of the Kingdom and its cities, as well as positives on the continuation of economic and structural reforms.
This is confirmed by the expenditure policy, which indicates that the Kingdom has given priority to the recovery of its economy and the enhancement of its gains by carefully prioritizing spending with a focus on quality projects with a profitable return and prioritizing them and setting up effective monitoring and performance monitoring mechanisms.
Therefore, the total estimated expenditure in the year 2019 were about 1106 billion riyals, an increase of 7.3% compared with the budget issued in 2018.
This increase allows for an increase in spending on the allocations of the programs initiatives to achieve the Vision of the Kingdom of 2030, with an expansion of spending with social impact and increased investment spending that aimed at stimulating economic activity and infrastructure development, which is reflecting the increase in economic activity.
Financing Policy
The report pointed out that the Ministry of Finance seems to continue to pursue a diversified funding policy between the issuance of debt and withdrawals of government deposits and the general reserve of the state in order to finance the budget deficit during the current fiscal year 2018.
It is expected that the total public debt would reach 560 billion riyals at the end of 2018, which is equivalent to about 19.1% of the gross domestic product, compared to 443 billion riyals, equivalent to about 17.2% of GDP for the previous year.
It is referring to the large increase in the volume of debt to the direction of the Kingdom's borrowing policy to fill the financial deficit of the Kingdom, until the objectives and results of economic reform programs are realized.
It pointed out that the Kingdom benefited from its sovereign investment rating in the issuance of debt securities in the world markets with good rates of return, which has witnessed a high turnout of foreign investors, which shows confidence in the financial policy of the Kingdom.
Public debt
Despite the increase in the size of the Kingdom's public debt this year compared to its size in 2014, its share of output is low compared to the rest of the Gulf countries and the G20 whose public debt as a share of GDP represents higher ratios than Saudi Arabia.
The report said internal public debt should be imposed by the financial and monetary conditions of the Kingdom as a result of its implementation of economic reform and structural adjustment programs.
But the domestic borrowing policy can be useful only if the funds of internal loans is used in productive investments and meet the demands of society.
The Public Debt Management Office was established in the fourth quarter of 2015.
Its role is to secure the Kingdom's needs for financing at the best possible cost in the short, medium and long term with risks consistent with the Kingdom's financial policies and to achieve the Kingdom's sustainable access to various international markets and fair pricing.
Not to prejudice direct services
The report showed that it does not affect the direct services provided to Saudi citizens such as health, education, social and municipal services, water and sanitation, roads, all infrastructure projects, and the provision of appropriate financial allocations to ensure the quality of those services, which confirms the consistency of expenditure targets in the budget of 2019 with priorities in the past few years.
Although the budget allocations for the 2019 budget included all sectors.
However, disbursement priorities have been consistent with priorities in the last few years. Provisions for the military and security services sector, the education sector, the health and social development sector, and the economic resources sector were accounted for 62% of the total allocations.
Education first
The education sector ranked first in the allocation of disbursements in line with the vision of the Kingdom in the development of human capacity; the development of the Saudi human factor, and the nutrition of the labor force market with skilled labor is one of the main pillars of the Vision.
The budget allocated for education for the year 2019 was 17.5% of the total volume of public expenditure in this budget.
While the security and military sector came in second place for allocations of exchange in line with the current political and social developments and what it takes to strengthen the national and sovereign protection measures of the Kingdom on its territory.The budget allocated for the year 2019 was about 17.3% of the expenses to meet the requirements of security and military,
Health and social development ranked third in the public expenditure ladder; as this sector is allocated about 15.6% of the total expenditure in this budget.
Right track
The report concluded that the new budget and other indicators confirm that the Kingdom's government is on track to reach its long-term goals by achieving balanced financial performance despite the economic challenges that still exist.
Reforms and economic measures came in the program to achieve financial balance proved effective, which contributed to the creation of more non-oil revenues, which is a positive indicator of the success of the Kingdom's economic and financial policies and a proof of the kingdom's progress towards achieving the objectives of the Vision of the Kingdom 2030.
The report concluded by emphasizing that the new budget ensured the continuation of the philosophy of balanced development, thus, enhancing the role of all regions in economic and social development, and not focusing on the development of one sub region in order to narrow the development gap between the different regions, reduce the population concentration in the cities of some areas, and overcome the effects of high population growth in the Kingdom.
