IMF国际货币组织全球-Saudi-Arabia_2019-Article-IV-Consultation_86页_2mb

Saudi Arabia 2019 Article IV Consultation Summary

Core Content

The IMF Executive Board concluded the 2019 Article IV Consultation with Saudi Arabia on July 10, 2019, following discussions held in Riyadh from April 23 to May 5, 2019. The consultation focused on macroeconomic developments, fiscal policy, structural reforms, and financial sector stability. The report outlines the progress made by the Saudi authorities in implementing economic and social reforms, particularly under the Vision 2030 agenda, and highlights areas for further improvement.

Main Views and Key Information

Economic Outlook and Growth

• Real non-oil GDP growth is expected to strengthen to 2.9% in 2019, driven by increased government spending and confidence, but real GDP growth is projected to slow to 1.9% due to a decline in oil growth to 0.7%.
• Non-oil growth is expected to pick up over the medium-term as reforms take hold.
• Unemployment rate among Saudi nationals has decreased but remains high at 12.5%.

Fiscal Policy

• The fiscal deficit is projected to widen to 6.5% of GDP in 2019, up from 5.9% in 2018, due to increased government spending and offsetting non-oil revenue growth.
• The deficit is expected to decline to 5.1% of GDP in 2020.
• Current account surplus is projected to narrow to 6.9% of GDP in 2019, down from 9.2% in 2018, due to moderation in oil export revenues and increased import growth.

Inflation and Credit

• CPI inflation has declined in recent months, mainly due to falling rents, and is forecast to decline by 1.1% in 2019, turning positive in 2020 with further energy price increases.
• Credit growth is expected to strengthen with the stronger non-oil economy.
• Bank liquidity should remain comfortable.

Reforms and Progress

• The authorities are continuing to implement their reform agenda, including fiscal reforms (lowering VAT registration threshold, quarterly gasoline price adjustments, and increasing fiscal transparency).
• Capital market reforms are ongoing, and Saudi Arabia has been included in global equity and bond market indices.
• Reforms to the legal framework, business environment, and SME sector are progressing, with new laws such as the bankruptcy law and public procurement law being enacted.

Financial Sector

• The banking system is well capitalized and liquid.
• Mortgage lending has grown rapidly, which requires careful monitoring.
• The financial sector remains resilient, and developments in agency banking and Fintech are expected to help broaden financial access.
• AML/CFT framework is being strengthened, and Saudi Arabia recently joined the Financial Action Task Force.

Exchange Rate and External Sector

• The exchange rate peg to the U.S. dollar continues to serve the economy well.
• Reserves at the end of 2018 amounted to $490 billion, equivalent to 26.7 months of imports.
• The current account surplus is expected to decline further in the medium-term due to oil price expectations.

Labor Market and Inclusive Growth

• The unemployment rate among Saudi nationals has decreased but remains high.
• Female participation rate has increased to 20.5% in 2019Q1.
• Expatriate employment (excluding domestic workers) fell by 10% in the year to 2019Q1.
• Labor market reforms are needed to increase the competitiveness of Saudi nationals and encourage female and youth employment.

Statistical and Data Issues

• Improving data quality and availability is crucial for better policy-making.
• The authorities have committed to subscribe to the IMF's SDDS by the end of the year.

Key Issues and Recommendations

Fiscal Consolidation

• Fiscal consolidation is essential to rebuild fiscal buffers and reduce vulnerabilities.
• Government spending needs to be managed more efficiently, and fiscal transparency should be improved.
• Publishing more detailed budget and spending execution data would enhance transparency.
• A robust asset-liability management framework is needed to guide borrowing and investment decisions.

Structural Reforms

• Structural reforms should focus on reducing the cost of doing business, improving the legal infrastructure, and tackling corruption.
• Industrial policies should be carefully implemented to encourage the development of new sectors.
• Government support should be sector-specific, time-bound, and performance-linked.

Financial Inclusion

• Financial inclusion for SMEs and women should be supported.
• Bank lending to SMEs has increased, and the Small and Medium Enterprises Authority has launched initiatives to improve access to finance.
• Five new foreign banks have been licensed since 2018.

External Sector and Oil Prices

• The peg to the U.S. dollar continues to be appropriate.
• Oil prices are expected to decline over the medium-term, which could widen the fiscal deficit.
• The non-exported oil primary balance (NEOPB) increased to -39.5% of non-oil GDP in 2018, up from -38.5% in 2017.

Risks and Uncertainties

• Volatility in global oil prices poses a risk to the economic outlook.
• Construction sector contraction and expatriate departures have impacted consumption, inflation, and the real estate market.
• Non-oil GDP growth has slowed compared to the pre-2014 period, and reduced demand from expatriates and increased supply from government housing programs are contributing factors.

Summary of Key Economic Indicators (2017–2020)

Conclusion

The IMF Executive Board acknowledged the progress made by Saudi Arabia in implementing reforms and the positive impact on the economy. However, they emphasized the need for continued fiscal consolidation, improved fiscal transparency, and structural reforms to support non-oil growth and job creation. The Vision 2030 agenda is seen as a key driver of long-term economic transformation, but the success of these reforms depends on the alignment of wages and productivity, as well as the effective implementation of labor market policies.