Riyadh – Mubasher: The Saudi general budget 2020 is viewed as progressive, as it focuses on balancing fiscal stability and economic growth despite oil market volatility, according to a review by KPMG Al Fozan & Partners.
The government of Saudi Arabia maintains economic diversification efforts, transitioning the economy away from its dependence on the oil sector by developing the private sector and enhancing its contribution to GDP in line with Vision 2030 goals, the review report noted.
The 2020 budget indicates a total expenditure of SAR 1.02 trillion, SAR 833 billion of projected revenues, and an expected budget deficit of SAR 187 billion, equivalent to 6.4% of the gross domestic product (GDP).
“The proposed budget focuses on maintaining fiscal stability and sustainability, improving the diversification of revenue sources, and taking measures to advance the economic and social development of the country,” Abdullah Al Fozan, Chairman of KPMG in Saudi Arabia, said.
“Despite the oil market volatility, which had some impact on the expenditure, the government has made notable progress on the Vision Realization Programs. In addition, the allocation of over SAR 1 trillion budget expenditure for 2020 demonstrates the government’s commitment towards driving economic growth,” he added.
Around 62% of revenue is mainly driven by oil revenue, while public debt is anticipated to reach SAR 754 billion, at 26% of the estimated 2020 GDP, growing by 11.2% compared to the previous year.
Real GDP growth is expected at 2.3% next year, as a result of relatively stable oil prices, implementation of Vision 2030 programs, and increased spending on infrastructure.
On the other hand, non-oil revenue is expected to touch a new high of SAR 320 billion in 2020, compared to a forecast SAR 315 billion in 2019, expanding by 1.6%, KPMG noted, pointing to the government’s continued efforts to develop non-oil sectors with a higher economic and social return.
Tax revenues are projected to grow by 1.2% to around SAR 200 billion in 2020, compared with SAR 203 billion in 2019, with taxes on goods and services set to provide the largest share of non-oil revenue at 44.4%.
Debt-to-GDP ratio is expected to equal 28% by 2021, compared to 25% predicted last year, due to volatility in the oil prices in 2019, however, Kingdom’s debt-to-GDP ratio remained significantly lower than many of its peers, the report indicated.
It is worth noting that with a total expenditure of SAR 1.02 trillion, the 2020 budget includes the allocation of SAR 193 billion for education, while spending on healthcare amounted to SAR 167 billion, making a combined 35% of the total spending.
