Strengthening the fiscal balance is a challenge to Saudi economic policies...

Strengthening the fiscal balance is a challenge to Saudi economic policies in the midst of the pandemic

Imposed strengthening of the planning process for state revenues and expenditures in the medium term


Sunday – 15 Rabi` Al-Awal 1442 AH – 01 November 2020 AD Issue No. [
15314]

The Coronavirus Pandemic Promotes Strengthening Financial Balance Tools in Saudi Arabia (AFP)

Riyadh: Muhammad Al-Hamidi

Saudi specialists in financial policies revealed that the Kingdom has achieved clear cohesion in its financial position in the midst of facing the emerging Corona pandemic crisis, amid a call to strengthen the financial balance tools, which represent one of the challenges facing under the exceptional circumstances and beyond, which strengthens the push for continued planning in the medium term for the necessity of financial sustainability .
Dr. Khaled Al-Suwailem, a non-resident expert at Harvard and Stanford universities in the United States, confirmed that raising the efficiency of government agencies, which occurred during the past five years through transformation programs and the Kingdom’s 2030 vision, contributed fundamentally to the ability of government agencies to react quickly in facing the crisis.
He said during a recent seminar on “economic growth and financial sustainability after the pandemic”: “We have seen in Saudi Arabia a rapid intervention by the Ministry of Finance and the Saudi Arabian Monetary Agency with great coordination and effectiveness among all state agencies in a way that has never happened before in previous crises,” adding, Hundreds of billions to support the capabilities of health services in the Kingdom and to preserve the jobs of citizens in the public and private sectors ».
Al-Suwailem believes that the Ministry of Finance has succeeded in maintaining a reasonable degree of financial balance between the state’s revenues and expenditures despite the decline in oil prices, which constituted a very important support for the state’s foreign currency reserves, indicating that this was reflected in the continued stability and strength of the riyal exchange rate, which represents the biggest support for the stability Prices and standard of living for citizens and residents in the Kingdom.
According to Al-Suwailem, the challenges that the pandemic crisis imposed on the Kingdom’s economy lie in the importance of strengthening the financial balance tools, including financial planning for the state’s revenues and expenditures in the medium term and the importance of having strong and sustainable foreign currency reserves, pointing out that these important criteria were previously absent, especially during the boom days. Finance and big hikes in oil prices.
According to Al-Suwailem, the Ministry of Finance did not have any financial planning program in the medium term, nor was there any national savings program for the future despite the huge financial capabilities available to the Kingdom, stressing that the correction of the path began a few years ago with the launch of the Kingdom’s Vision 2030 and the initiation of the Ministry The financial system in its new organization to periodically announce its financial plans in the medium term, as the first national savings program for the future was established, represented by the Saudi Sovereign Fund.
Al-Suwailem, who is a member of the Board of Directors of Samba Financial Group and Chairman of the Board of Directors of Ashmore Saudi Company, added that there is no doubt that the economic and structural transformation that the Saudi economy is witnessing during the past four years since the launch of the Kingdom’s Vision 2030 is a major achievement for the Kingdom, stressing at the same time that it is difficult to envision a future. The Saudi economy if the financial squandering and missed opportunities continued, as they were in the past.
On the efforts to diversify the economy and enhance the role of the private sector, Al-Suwailem referred to the new and critical role of the Public Investment Fund in stimulating the local economy and opening up wider areas and new future sectors in order for this to have a greater impact on the private sector by entering into active partnerships or the so-called public partnership. And the private (PPP) National Development Fund, which was newly established and became overseeing all government development funds.
He added, “In the past few weeks, the fund’s board of directors headed by the Crown Prince has approved a number of important initiatives to maximize the returns of these funds and support participation with the private sector in new ways that are in line with what is in place in the best global government funds.” It is a great achievement that calls for a lot of optimism about the promising future of the private sector in the Kingdom.
On the other hand, Dr. Saad Al-Shahrani, Undersecretary of the Ministry of Finance for macro-financial policies, confirms that the ministry, when preparing the general budget for each year, actually undertakes a strategic plan for the public financial framework in the medium term, and that there are strategies for borrowing in the medium term from 3 to 5 years that the government is committed to, However, the current exceptional circumstances imposed some developments, such as raising the public debt accumulation, which reached 34 percent of GDP this year.
Al-Shahrani added, “The Kingdom has a very strong financial center that helps it at any moment to intervene and finance what it needs to be financed in the most difficult crises.” The Kingdom has adopted the development of macro-financial policies that work to create medium and long-term financial sustainability that includes pillars, the most important of which is controlling the size of the deficit and not exacerbating the debt. The general existence of large reserves as a safety valve to confront crises, as well as the efficiency of spending and financial control and the development of non-oil revenues to obtain sustainable income to finance all reserves ».

Economy

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