Mohammed Al-Jadaan said that economic activities in the Kingdom have returned to its strong position in the third and fourth quarters of 2020.
Addressing the Saudi Budget 2021 Forum here on Wednesday, the minister stressed that the expenditures were reoriented in order to focus on the priority of preserving health of citizens and expatriates.
He also noted that Saudi Arabia, in the meantime, supported the private sector to preserve jobs of Saudis. “The decision to safeguard the jobs of citizens in the private sector was taken within 48 hours,” he added.
Minister of Finance Mohammed Al-Jadaan had earlier said that fiscal year 2020 was unusual due to the coronavirus pandemic, adding that lifting the complete lockdown led to the resumption in economic growth with promising preliminary results despite the ongoing concerns.
Saudi Arabia undertook quarterly budget announcements starting 2017, with the aim to enhance the level of transparency and financial control, and improve budget performance reports to comply with the goals of Vision 2030.
Referring to the initiatives taken to secure the supply chains during the pandemic crisis, Minister of Commerce Majed Al-Qasabi told the session that the Kingdom has been able to ensure the flow of goods, services, medicines and shipping lanes during the coronavirus crisis.
Al-Qasabi also drew attention to the sense of responsibility demonstrated by everyone from citizens to the private sector and companies during the crisis, saying that everyone raised to the slogan “We are all responsible.”
“Traders kept pace with the shift in the commercial pattern by turning their services into e-commerce, in addition to forging partnership with government agencies to ensure the provision of goods,” he added.
On his part, Minister of Transport Nasser Al-Jasser said that the Kingdom’s ports witnessed an increase in the number of import and export containers by five percent, despite the decline in global trade by about 15 percent caused by the unprecedented circumstances following the outbreak of the pandemic.
Saudi Economy
The kingdom will stick to its plan to cut spending by 7.3% in 2021 after its deficit widened dramatically this year, according to an annual budget statement released Tuesday. Spending is projected at 990 billion riyals ($264 billion).
The budget deficit is expected to narrow to 141 billion riyals, or 4.9% of economic output, compared to nearly 300 billion riyals, or 12% of gross domestic product, this year.
This year revenues are estimated at 770 billion riyals ($205bn) and 849 billion riyals ($226bn) next year, the budget statement said.
Saudi Arabia: King Salman Approves $264bn State Budget for 2021
For 2020, Saudi Arabia estimated oil revenues at 412 billion riyals ($110bn) after budgeting 513 billion riyals ($137bn) and estimated non-oil revenues at 358 billion riyals ($95bn) after budgeting 320 billion riyals ($85bn).
For the first time, the budget did not offer a breakdown for oil and non-oil revenue because the kingdom’s oil giant Aramco floated a sliver of its shares on the Saudi stock market last year, said Finance Minister Mohammed al-Jadaan. Disclosing revenue forecasts could shed light on the billions of dollars in dividends the state-owned company continues to pay to shareholders despite a steep fall in revenue. Almost all of the dividend money goes to the company’s majority owner, the Saudi government, to help cover state spending.
Saudi Arabia has been grappling with a budget deficit since oil prices first plunged in 2014. For years it increased public spending, drawing from robust fiscal reserves to cushion the impact of austerity measures like new taxes and subsidy cuts. With crude prices crashing to some $40 a barrel as the virus cut demand, the kingdom took more drastic measures, tripling its value-added tax to 15 percent and stripping allowances for state workers.
Even as coronavirus vaccine trial results have nudged oil prices up toward $50, stoking hopes of economic recovery, the kingdom’s planned 2021 budget cuts signal that petrostates in the region will still struggle to balance their budgets as prices remain depressed.
State-owned Saudi oil giant Aramco said it would pay an overall dividend of $75bn this year, the large majority of which would go to the government.
Saudi Arabia tripled a value-added tax in July to boost non-oil revenues, but that is limiting domestic demand, dampening economic recovery.
