Saudi Crown Prince commends $76.5bn non-oil revenue in 2018
Finance minister lauds VAT and energy price reforms for non-petrodollar growth as 2019 budget revealed
Saudi Arabia’s non-oil revenue has more than doubled between 2014 and 2018 to $76.5bn (SAR287bn), and Crown Prince HRH Mohammed Bin Salman bin Abdulaziz Al Saud said this growth underscores the kingdom’s economic achievements as outlined by the goals of its Vision 2030 long-term diversification programme.
The Crown Prince said Saudi Arabia’s economic and structural reforms are steadily moving to achieve the targets of Vision 2030, which is also accounted for in the 2019 budget. The document was approved by Custodian of the Two Holy Mosques, HRH King Salman bin Abdulaziz Al Saud of Saudi Arabia, on 18 December, 2018.
Calling financial stability a fundamental pillar of economic progress, the Crown Prince said reforms introduced in Saudi Arabia over the last two years have directly contributed to the kingdom’s steady reduction in budget deficit. The kingdom announced a budgetary shortfall for the sixth year in a row as part of its 2019 budget. On 18 December, Saudi announced that its projected 2019 deficit of $36.2bn (SAR136bn) is 32% lower than the corresponding value expected for 2018, $52bn (SAR195bn).
But it is the growth of non-oil revenues that stands out in Saudi Arabia’s 2019 budget announcement. In 2014, non-oil earnings worth $33.9bn (SAR127bn) contributed 12% to Saudi Arabia’s total revenue, and this number has surged to 32% in 2018, when the corresponding figure is valued at $76.5bn. In a statement, Saudi Arabia’s Minister of Finance, Mohammed Al-Jadaan, said this growth is “largely attributed to the continued implementation of economic reforms and initiatives such as value-added tax (VAT) and energy price reforms”.
Total expenditure in Saudi Arabia for 2018 is expected at $266.6bn (SAR1tn), while revenues for the year are projected to note 29.4% year-on-year (YoY) growth, reaching $238.6bn (SAR895bn). Expenditure in 2019 is expected at $293.2bn (SAR1.1tn) – a 7.3% YoY hike fuelled by a 20% increase in capital expenditure, which is valued at $65.6bn (SAR246bn) in line with Vision 2030’s goals.
Non-oil revenue growth is expected to note further growth in 2019 – during the year, the kingdom expects total revenues of $260bn (SAR975bn), of which $176.5bn (SAR662bn) will be derived from oil earnings. Even the latter figure is higher than 2018’s oil revenues of $162bn (SAR607bn).
Social spending is also a major area of focus within Saudi Arabia’s 2019 budget, and takes up to 42% of the kingdom’s expenditure for the year. The Crown Prince said the Saudi government would continue to launch Vision 2030 programmes in 2019 with a view to strengthening local infrastructure, and creating more citizen jobs and an attractive investment environment.
The private sector plays a key role in Saudi Arabia’s plans for 2019, with the Crown Prince pointing out that the kingdom has allocated $53.3bn (SAR200bn) in the medium-term to implement initiatives aimed at private sector stimulation. “The implementation of these initiatives began in 2018,” he said, as reported by Saudi Press Agency (SPA), the kingdom’s state-owned press outlet.
Finance minister Al-Jadaan too highlighted the role of the private sector in Saudi Arabia’s growth plans for 2019 and beyond. The government, he explained, is working on “several economic reforms aimed at stimulating investment in the economy and enhancing investor confidence”, according to a separate SPA report. As part of this push, various privatisation programmes and capital expenditure projects will be launched, as will relevant stimulus packages and new sectors.
Al-Jadaan said the Crown Prince-led Public Investment Fund will play a “pivotal role in supporting economic development”, both through the development and management of its assets as well as by “raising productivity levels”. Its key contributions will include the $500bn (SAR1.9tn) Neom mega city and Red Sea Project, both of which will achieve Saudi Vision 2030’s goals.