In an analytical study for the Asharqia Chamber: The new budget supports economic recovery and financial sustainability
Asharqia Chamber confirmed, through the analytical study it issued on Monday, December 13, 2021 AD, entitled (Analysis of the overall performance of the Kingdom’s budget indicators for the fiscal year 2022 AD.. Initiatives, stimulus packages, economic recovery, and financial sustainability), that economic performance and growth in most economic activities constitute an important element in achieving targets. The financial and economic year 2022 AD, and that the expected budget shows, with its indicators of continuous recovery in some activities, at faster rates that may exceed pre-pandemic levels, due to the government efforts that contributed to dealing with the pandemic by limiting its effects and significantly receding, despite global challenges in the evolution of the virus. And it's continued spread in many countries, noting that the fiscal policy has strengthened the government’s reserves at the Central Bank, which are estimated to reach rates higher than estimated in 2022 and will continue to increase in the medium term through budget surpluses expected to be achieved in 2023-2024.
The study, which came in four main axes, noted the government's continuous efforts to stimulate the economy and support the private sector, such as those provided by the Saudi Central Bank, from the rapid response of the economy, in the first half of 2021 AD, the non-oil GDP recorded a growth of 5.4% Supported by the growth of the real GDP of the private sector, which recorded a growth of 7.5%, and it is expected that the real GDP will grow by 2.6% in 2021, driven by the growth of non-oil GDP by 4.2%, accompanied by continuous progress in the implementation of programs and projects to achieve the vision and develop promising sectors of the national economy.
The study went on to confirm that the remarkable and expected recovery in the Kingdom’s economy will lead to positive developments on the revenue side in the medium term, as the total revenues for 2021 are expected to reach about 930 billion riyals, an increase of 19% compared to the year 2020 AD; This is due to the expected rise in oil revenues and an increase in non-oil revenues by 18.2% compared to the year 2020.
Concerning public expenditures, the study expected that the total expenditures for the year 2021G will amount to about 1,015 billion riyals, down by 5.6% from the actual expenditure in 2020 and rising by about 2.6% from the approved budget. Compared to 2019, it is down by 4.2%, which reflects the result of the government’s efforts to raise spending efficiency, and attributed the increase in total expenditures compared to the budget for the current year 2021 AD as a result of several main factors, the most important of which is spending related to the “Covid-19” virus, which includes an increase in working hours for some workers. In the health sector, due to the rapid immunization of the population in the Kingdom, as well as the expenses of purchasing the vaccine.
The study confirmed that the effective government measures taken by the Kingdom to enhance transparency and supportive steps to diversify the economy, represented by the efforts of the Public Investment Fund and the National Development Fund, have greatly supported the investment environment in the country, which indicates the enhancement of economic growth prospects in the medium term, in addition to supporting a rapid recovery. during the year 2021 AD.
She explained that maintaining spending levels reflects the extent of commitment to the ceilings and the approach followed in the financial policies that support raising spending efficiency and developing the effectiveness of social spending, in addition to re-arranging priorities based on developments and developments in line with the requirements of the current period, in addition to continuing spending on major projects and vision realization programs. This will be in line with the objectives of the Kingdom’s Vision 2030, which will provide more opportunities for funds and the private sector to contribute and participate in the exploitation of investment opportunities and the privatization of some government assets and services, in addition to infrastructure development projects in the Kingdom.
The study expected that the real GDP would register a growth of 2.6%, driven by the growth of the non-oil GDP by 4.2%, taking into account the performance of economic indicators during the first half of the year, and also that the inflation rate for the whole year would reach about 3.3%, taking into account the fading of the impact of An increase in the value-added tax rate in the second half, after the inflation rate for the first half of this year reached 5.5%, as well as an increase in some prices of imported goods as a result of the measures implemented to confront the pandemic in industrialized countries and the impact of global supply chains.
In light of these local developments and the return of recovery to the global economy, the study expected, based on a review of estimates of economic growth rates in the Kingdom for the year 2022 AD over the medium term, that the private sector will continue to grow at a higher rate than before to lead economic growth and create jobs, as preliminary estimates indicate the growth of GDP The real growth rate of 7.5% in 2022 AD, driven by the growth of non-oil GDP, assuming the return of the recovery of economic activities, and the improvement of the Kingdom’s trade balance as an extension of the positive growth rates in the first half of 2021 AD, in addition to an increase in oil production and raising the production share of the Kingdom starting from May 2022 AD according to the OPEC agreement Plus, the recovery of global demand and the improvement in global supply chains, which will reflect positively on the local economy.
The study showed the extent of the increasing demand for the Kingdom’s sovereign issuances by investors, as the government, within the international bonds and Sukuk programs of the government of the Kingdom of Saudi Arabia were able to complete its first international issuance for the year 2021 AD of bonds in the dollar currency with a total of 5 billion dollars and a coverage ratio of 4 times of the total issuance. It completed its second international issuance of bonds in the euro currency with a total of 1.5 billion euros and a coverage rate of more than 3 times the total issuance, as the three-year tranche achieved a negative return.
The study indicated the government’s support of the private sector by extending several initiatives to mitigate the impact of the pandemic, which in turn enhances the continuation of sustainable economic growth in the medium term, in addition to the role of the Public Investment Fund, which will pump approximately 150 billion riyals annually into the national economy until 2025. , supported by projects that will increase the pace of GDP growth in the Kingdom in creating investment opportunities and launching new and promising sectors such as the tourism sector through the NEOM project, the Red Sea project, the Qiddiya project, and the Amaala project, as well as the real estate sector through several projects implemented by Roshen Real Estate Company to develop neighborhoods High standards of housing, as well as the initiative to support national products and services through the “Made in Saudi Arabia” program, which will provide a large package of advantages and opportunities for companies in order to expand the scope of their work and promote their products locally and globally, in addition to the logistics sector, which includes trains and buses through the operation of the King Abdulaziz project public transport, in addition to launching several programs and initiatives in the technology and artificial intelligence sector, the most important of which are the three initiatives Main (Twaiq, Himma, and Qimma) to achieve the objectives of the Kingdom’s vision to seize the opportunities of the digital economy in a way that enhances the role of the non-oil sector.