Friday, 29 March 2024

Addressing financial sustainability, fiscal stability symposium

Saudi Arabia’s Economy, firmly, Functioning on the Path of Stability

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Realistic and responsible policies and measures taken by the government, in dealing with the coronavirus pandemic, have limited the humanitarian, financial and economic repercussions, and put the country on the path of stability, Minister of Finance Mohammed Al-Jadaan has  confirmed.

That has taken place, as financial and economic reforms that aim, at a comprehensive and total change of the economy, in order to bring about a major developmental shift, in the medium and long term, have been pursued, he added.

Drawing attention to the fact that the Kingdom’s economy has begun to witness a gradual recovery, since the middle of the Year 2020, and becoming stronger this year, pointing to the high positive growth rates, in the real non-oil sector.

They rates reached 8.4% in the second quarter of the year, led by the private sector, which recorded a growth rate of 8.4%. 11.1%, as well as the growth of non-oil activities by 6.2%, for the third quarter of this year, which was reflected on the positive results of the performance of public finances, he stated.

Government is working through the Financial Sustainability Program to reduce vulnerability to external factors, including fluctuations, in oil markets, by adopting financial rules that achieve fiscal sustainability and sustainable development, which in turn, reflect on financial stability, he elaborated, indicating that these rules adopt new approaches to determine spending

ceilings over the long term.

It is also based on estimating structural oil revenues based on the average real historical revenues for a long period, as well as estimating non-oil revenues as a percentage of non-oil GDP to form spending ceilings, he pointed out, explaining that these rules will limit the fluctuation of spending and resulting multiple negatives, as they include minimum and upper limits for government reserves, as surpluses are dealt with, if they are achieved, to enhance government reserves, support development funds.

For its part, the Public Investment Fund pay the whole or a part of the public debt, instead of without repeating the mistakes of the past, as spending the reserves on expenditures that do not achieve the long-term benefit for the country and the citizens.

In the first dialogue session of the symposium titled “Financial Sustainability”, he confirmed that the financial policies pursued by the Kingdom today, take into account financial stability and avoid any negative effects, on the economy, indicating that financial stability is a significant element as it is important for the economy as a whole, not just the public and private sectors.

On the issue of debt, he indicated that the government did not face any challenges in debt issuance even in the worst times of ,the pandemic, and that debt repayment depends on multiple factors, including interest rates, drawing attention to the fact that the credit rating is very important, not only for the government, but also for its impact as it goes beyond that and extends to the private sector and individuals, stressing that the government is keen in its financial policies to positively affect the credit rating.

It is noteworthy that the Financial Stability Symposium is annually organized by the Central Bank of Saudi Arabi and the Capital Market Authority, in the presence of an array of ministers, and participation of a number of officials and executives from financial sector institutions.

This year symposium discussed – through two dialogue sessions – the topics of financial sustainability and financial stability of the banking and financial sector.

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