Monday, 11 December 2023

MoF welcomes the IMF Staff’s Statement on Article IV Consultation ‎with the Kingdom in 2022.‎


IMF staff lauded the Kingdom’s economic and financial condition in ‎their final statement made at the end of their visit about Article IV ‎consultation with the Kingdom in 2022. They reiterated their ‎constructive prognosis for the Kingdom’s economy in the short and ‎medium term, with further rebound in economic growth rates and ‎inflation control, as well as enhanced strength in the Kingdom’s ‎external economic position.‎

According to the statement, the IMF anticipated the Kingdom’s GDP to ‎rise by 7.6% in 2022, the non-oil sector to grow by roughly 4.2%, the ‎current account surplus to climb to 17.2% of GDP, and overall inflation ‎to remain at an average of 2.8%.‎

The statement noted that the Kingdom successfully dealt with the ‎coronavirus pandemic (COVID-19), emphasizing that it is in a position ‎to overcome the risks posed by the Ukrainian crisis and the tightening ‎monetary policy cycle in developed economies, noting that the impact ‎of tightening global conditions on the Kingdom’s economy is limited ‎due to the banking sector’s high levels of liquidity and capitalization. ‎Economic activity is also improving significantly, aided by increased oil ‎prices and government reforms implemented in accordance with Vision ‎‎2030. ‎

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The report also emphasized that the kingdom’s economy’s future ‎prognosis is optimistic in the short and medium term, with ongoing ‎recovery of economic growth rates, containment of inflation, and ‎strengthening of its external economic position. The IMF staff noted ‎that the continuation of its implementation of structural reforms will help ‎ensure a strong, comprehensive and environmentally friendly recovery, ‎pointing out that the Kingdom is strongly recovering from pandemic-‎caused recession, indicating that the support provided by public ‎finances, the momentum of reforms, high oil prices and increased oil ‎production helped the Kingdom recover, as it witnessed a strong ‎boost.THE REAL NON-OIL GDP GREW BY 4.9% IN 2021 driven primarily by ‎the recovery of the manufacturing and retail sectors (including e-‎commerce) and the commercial sector.‎

The statement noted that The Kingdom’s unemployment rate fell to ‎‎10.1% in the first quarter of 2022 as a result of the high rates of ‎employment of Saudi citizens in the private sector, while praising the ‎effective initiatives to increase women’s participation in the workforce, ‎which led to exceeding the Kingdom’s Vision 2030 targets.‎

In terms of fiscal policy, the mission applauded the Kingdom’s ‎commitment to ensuring the sustainability of public finances and efforts ‎to avoid keeping up with economic cycle tendencies by establishing a ‎spending cap unaffected by oil price variations. IMF staff also ‎expected that public finances would outperform budget forecasts in ‎‎2022, and that the debt-to-GDP ratio would decline. ‎

The mission also emphasized that financial stability risks are well ‎contained, as levels of profitability, liquidity, and capitalization are good ‎at the banking system level, and that the impact of further tightening of ‎global monetary policy conditions will be limited on credit growth and ‎non-oil GDP, but positive on banking sector profitability.‎

The IMF staff’s final statement welcomed the Kingdom’s efforts ‎regarding climate policies, stressing that the government is working to ‎intensify investments in the production of blue and green hydrogen, in ‎addition to its continuous efforts in research and development with a ‎focus on the circular carbon economy.‎

For his part, His Excellency the Minister of Finance, Mr. Mohammed bin ‎Abdullah Al-Jadaan, said: The statement highlighted the current ‎indicators and positive future prospects for the Saudi economy, which ‎has overcome many of the obstacles and challenges confronting the ‎global economy over the last two years while maintaining financial ‎sustainability, enhancing the Saudi economy’s solidity and strength; ‎stressing the importance of the Kingdom’s economic and structural ‎changes under Vision 2030, as well as their contribution to attaining ‎sustainable and inclusive economic growth.

His Excellency welcomed the IMF staff’ praise of the Kingdom’s efforts ‎to mitigate the economic, social and health effects of the Corona ‎pandemic, stressing that the Kingdom is currently experiencing a ‎strong recovery following the pandemic-induced recession, and that ‎rising oil prices provides an opportunity to accelerate the pace of ‎reforms being implemented under the Saudi Vision 2030.‎‎

It is noteworthy that an initial statement was issued by the IMF mission ‎following the conclusion of Article IV consultation with the Kingdom of ‎Saudi Arabia in 2022, which took place during April 2022. This final ‎statement confirms the preliminary findings of the previous statement.‎