## 1. New Methodology of National Account Statistics ## Source details **Canonical URL:** [1. New Methodology of National Account Statistics](https://www.imf.org/-/media/files/publications/cr/2025/english/1sauea2025001-source-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1sauea2025001-source-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1sauea2025001-source-pdf.pdf.json) --- ### Methodology update and assessment - In May 2025, GASTAT released updated GDP statistics incorporating a comprehensive methodological revision (mostly within-sector revisions) and rebase from 2018 to 2023. - Update builds on chain-linked real GDP enhancements published in 2024 and integrates IMF technical assistance recommendations from 2019–2024. - IMF staff assessment: updated methodology and base year generally consistent with international best practices and the 2008 UN System of National Accounts. - Remaining minor issues for future SUT revisions: shifts in intermediate consumption patterns across industries and changes in value-added-to-output ratios. - Key methodological changes: - Supply and use table (SUT) enlargement: industry and product classification expanded from 85x85 to around 300x300; coverage now includes 134 economic activities (previously 85). - Real GDP benchmarking updated from 2018 to 2023, aligning real and nominal GDP levels for 2023. - Expansion enabled by enhanced input data from comprehensive economic, household, expenditure, labor force, and agricultural surveys. ### Implications of rebasing and SUT expansion - Higher GDP levels from rebasing: - New rebased nominal GDP level is 14 percent higher in 2024 than previously estimated. - New rebased non-oil GDP level is 20 percent higher in 2024 than previously estimated. - Non-oil economy’s share (including net taxes on products) rose from 72 to 76 percent. - Policy implications: - Vision 2030 targets are expected to be revised across ministries. - The new series offer more informed guidance for policy formulation and decision-making. - Data provision progress: - Expanded Household Income and Expenditure Survey (five times larger). - Publication of new environment statistics in December 2024. - Ongoing enhancements to CPI and WPI, expansion of sectoral data, and development of climate statistics. - Continued SAMA efforts to improve BOP and IIP coverage and granularity for SDDS+ preparations. ### Recent economic developments (post-rebasing context) - Growth and sectoral performance: - Non-oil real GDP expanded by 4.5 percent in 2024 (newly rebased series). - Non-oil private investment grew 6.3 percent year-on-year in 2024. - Oil output remained at 9 mbpd in 2024, the lowest level since 2011, due to repeated OPEC+ production cuts. - Oil GDP declined by 4.4 percent in 2024. - Overall real GDP growth in 2024 was 2 percent. - Q1 2025 GDP release: non-oil activities rose 4.9 percent y-o-y. - Inflation and wages: - Headline inflation reached 2.2 percent in May 2025. - Housing rent inflation slowed to 8 percent y-o-y (seventh consecutive month of deceleration). - Real wage growth was flat overall; wages in service industries and for highly skilled workers increased by about 6 percent in real terms. - Labor market: - Unemployment rate for Saudi nationals declined to 7 percent in 2024 Q4. - Private sector employment increased by 12 percent on average in 2024, driven mainly by higher female employment. - Construction sector labor force rose by 24 percent, largely fueled by non-Saudi workers. - External sector and reserves: - Current account registered a deficit of 0.5 percent of GDP in 2024, down from a 2.9 percent of GDP surplus in 2023. - Drivers of reversal: decline in oil export proceeds; higher imports of machinery and equipment; stronger remittance outflows (remittances accounted for one fifth of the deterioration); partially offset by significantly expanded tourism inflows. - SAMA net foreign assets (NFA) stabilized at $415 billion by end-2024. - NFA adequacy: covers 15 months of imports and 187 percent of the IMF’s reserve adequacy metric. - Q1 2025 trade data suggested continued deterioration despite non-oil export growth of 13.4 percent. ### Banking, financial sector, and market conditions - Banking sector soundness (end-2024): - Aggregate regulatory capital ratio: 19.6 percent of risk-weighted assets. - Tier 1 capital ratio: 18.3 percent of risk-weighted assets. - Return on assets: 2.2 percent. - Return on equity: 15 percent. - Nonperforming loans: 1.2 percent of total loans. - Liquid assets to short-term liabilities ratio has been declining though liquidity indicators remain adequate. - Market and sovereign issuance: - Central government and PIF raised $17 billion and $9.8 billion, respectively, in 2024. - Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets (excl. China) in 2024 and the largest dollar-denominated Sukuk issuer globally. - Sovereign spreads tightened following bond issuances; Tadawul All Share Index underperformed the S&P 500 since mid-2023 and remained relatively flat over the past 12 months. ### Near-term and medium-term outlook - Near-term projections: - Non-oil real GDP growth projected at 3.4 percent in 2025. - Overall real GDP projected to accelerate to 3.6 percent in 2025. - Oil output expected to reach 9.5 mbpd in July (up from 9 mbpd in Q1 2025), with further monthly increases following original OPEC+ phase out schedule from August onwards. - Robust domestic demand drivers: continued Vision 2030 projects implementation and strong credit growth. - Medium-term projections and investment: - Oil production expected to recover gradually to 11 mb/d by 2030—still below maximum sustainable capacity of 12.3 mb/d. - Non-oil growth to converge towards 3.5 percent in the medium term. - Non-oil private investment growth supported by continued PIF contributions of at least $40 billion annually into the domestic economy. - Event-driven non-oil growth upticks expected in 2027 (Asian Cup), 2029 (Asian Winter Games), 2030 World Expo, 2034 FIFA World Cup. ### Fiscal outlook, policy recommendations, and consolidation path - 2025 fiscal stance and staff projection: - Staff projects the overall fiscal deficit at 4 percent of GDP in 2025 (twice the budget target). - The budget assumed savings of about 1.3 percent of GDP from one-off 2024 expenditures; staff anticipates higher current expenditures and lower oil-related revenues. - Staff considers no additional improvement in the non-oil fiscal balance necessary in 2025 to avoid procyclicality. - Medium-term fiscal path: - Overall fiscal deficit peaks at 4.0 percent of GDP in 2025, declining to about 3.2 percent of GDP by 2030. - Public debt-to-GDP ratio projected to increase to 40.6 percent by 2030; staff assesses this as consistent with a low sovereign debt risk. - Recommended consolidation (2026–2030): - Additional adjustment of approximately 3.3 percent of non-oil GDP between 2026 and 2030 to support progress toward the PIH-based fiscal anchor (15-year transition), primarily relying on revenue measures and subsidy reforms. - Tax policy and revenue mobilization priorities: - Close the tax gap with the G20 average (estimated at about 10 percent of GDP over time). - Tax measures recommended (preserve exact wording): assess impact of international tax agreements and expand the VAT base—including unregistered e-commerce transactions; remove VAT exemptions on home purchases and real estate transactions; introduce a property tax (Box 3); introduce a personal income tax; reform excise duties (including for luxury and environmentally harmful items); reform corporate taxation. - Revenue administration measures: maintain mandatory e-invoicing, risk-based auditing, and tax awareness campaigns; avoid renewing the temporary tax penalty waiver introduced repeatedly since Covid; undertake the upcoming TADAT assessment. - Property tax potential: - Recurrent property tax could raise revenue around 1 percent of GDP (reference: Morocco raises 0.95 percent of GDP). - Expenditure measures and priorities: - Accelerate energy subsidy reform—3.5 percent of GDP. - Rationalize expenditure—delaying low priority projects and items with low long-term fiscal multipliers—0.5-1.0 percent of GDP. - Additional expenditure measures—0.5 percent of GDP. - Spending rationalization tools include wage bill management, better targeting (Citizen’s Account to Damaan), and spending prioritization while preserving medium-term growth-augmenting investments. - Contingency planning and buffers: - Central government deposits about 9.3 percent of GDP in 2024. - For a significant and permanent oil price decline: recommend more aggressive fiscal consolidation, project reprioritization, consider asset divestment and raising the VAT rate. - For a temporary oil price shock: recommend partial drawdown of fiscal buffers (central government deposits at the central bank), but caution on drawing down public sector deposits in commercial banks due to sovereign-bank nexus risks. - Recommend operationalizing a comprehensive SALM framework including government-related entities and regular PIF risk assessment and stress testing. ### Risks, scenarios, and Growth-at-Risk - Downside risks: - Weaker oil demand, escalation of global trade tensions, financial instability, geoeconomic fragmentation. - Fiscal deficits and debt pressures, weaker investor confidence, costlier financing affecting banks’ rollover of external debt. - Regional security risks causing supply chain and travel disruptions. - Sharp cuts in government-related entity spending hindering private investment and diversification. - Upside risks: - Higher-than-expected oil production or additional investments linked to large-scale projects and Vision 2030. - Growth-at-Risk (GaR) findings: - Baseline probability of recession (negative growth) for non-oil growth: 5.9 percent. - An oil price drop to below 30 $/b reduces mean non-oil growth by 0.7 percentage points and increases probability of recession to 6.1 percent. - A one standard deviation negative shock to China’s real growth lowers Saudi’s mean growth by 0.22 pp and raises probability of recession by 0.55 percentage points. - Low oil price scenario (assumptions and impacts): - Assumes temporary shock to $40 per barrel in H2 2025 and 2026 before gradual recovery. - Macroeconomic impacts (exact projections from Annex): - Non-oil GDP growth weakens to 2.7 percent in 2025 and 1.9 percent in 2026 (baseline: 3.4 percent and 3.5 percent). - Overall fiscal deficit would increase to 6.7 percent of GDP in 2025 and 10.4 percent in 2026 (baseline: 4.0 percent and 3.9 percent). - Sovereign spread widens by approximately 150 basis points in H2 2025 and 2026. - Central government gross debt could increase close to 60 percent of GDP over the medium term (baseline ~41 percent in 2030) assuming no buffer drawdown. - Current account deficit worsens to 5.5 percent of GDP in 2025 and 9.5 percent in 2026. - SAMA NFA would fall to around 10.5 months of imports by 2030 (baseline ~12 months). - Policy options: partially draw down buffers (example: central government uses half of its deposits = 4.5 percent of GDP during 2025-2026), accelerate non-oil revenue mobilization, delay non-essential projects, divest assets, repatriate FX deposits, and have PIF/development funds play countercyclical role. - Caveat: persistent shock would require more aggressive fiscal adjustments including broader VAT base and higher VAT rate. ### Macroprudential, monetary, and financial stability recommendations - Macroprudential measures and banking supervision: - Staff welcomes SAMA’s May 2025 introduction of a 100-basis-point countercyclical capital buffer (effective within one year). - Recommend tighter borrower-based measures: review and lower DSTI and LTV limits (current DSTI limits: 65 percent with mortgage subsidies; 55 percent without subsidies); phase in revised limits gradually. - Discourage risky non-deposit funding (short-term external borrowing); consider formal LCR and NSFR requirements for foreign currency exposures and prudential limits on net foreign exchange positions. - Adjust SAMA’s regulatory loan-to-deposit ratio by reducing weight of foreign currency funding to discourage short-term external borrowing. - Enhance bank supervision: continue ICAAP and ILAAP, upgrade internal systems, data templates, supervisory cycle, and be ready to impose bank-specific prudential requirements. - Liquidity management and market development: - Continue refining liquidity management framework and use market-based instruments to smooth short-term liquidity imbalances. - Implement new data-sharing arrangement between Ministry of Finance and SAMA on expected government flows. - Reform reserve requirement regime (review maintenance window) and rationalize maturities of term repos and SAMA bills. - Deepen capital markets: ease restrictions on qualified foreign investors, create a market for qualified professional investors, increase asset-backed securities use, and consider a local rating agency (Tasnif). - Financial sector risks and monitoring: - Monitor loan-to-deposit ratios and external liabilities (banks’ external liabilities reached SAR486 billion by end-April 2025). - Banks’ NFA turned negative in mid-2024 for first time since 1993 and expected to continue declining as banks secure additional external funding. - High share of deposits from government-related entities plateaued around one-third of total bank deposits; requires monitoring. - SAMA stress tests confirm resilience to low oil price and slowdown scenarios, but strong credit growth requires vigilance. ### Structural reforms, investment, and PIF role - Structural reform priorities to lift productivity and diversification: - Regulatory and business environment: enforce Updated Investment Law; leverage digital platforms; streamline fees; implement regulatory impact assessment. - Labor market: implement Labor Market Strategy 2025–2030 and National Skills Strategy; expand training, affordable childcare, flexible schedules; female labor force participation is 36 percent. - SME finance: SMEs account for over 60 percent of private sector workforce; SME lending rose from 5.8 percent in 2018 to 9.4 percent in 2024; aim for Vision 2030 target of 20 percent. - Governance: Nazaha by-laws (Nov 2024), Ultimate Beneficial Ownership rules (Apr 2025), anti-corruption strategy planned within 2–4 years. - Regional trade integration: GCC intra-regional trade ~10 percent of total exports; remove non-tariff barriers and address logistics/financing. - PIF guidance: - PIF should prioritize crowding in private sector investment and advancing diversification. - PIF remains largely domestic (97 percent of consolidated revenue tied to Saudi entities). - Staff advises comprehensive assessment of government-entities’ holdings for potential divestment and greater use of PPPs. - Industrial policy should be cost efficient, include exit criteria, claw-back mechanisms, and sunset clauses. ### Quantitative summary (selected exact figures from source) - SUT classification: expanded from 85x85 to around 300x300; now covering 134 economic activities. - Rebase year: from 2018 to 2023. - Nominal GDP (2024) revision: 14 percent higher than previously estimated. - Non-oil GDP (2024) revision: 20 percent higher than previously estimated. - Non-oil real GDP growth (2024): 4.5 percent. - Non-oil private investment growth (2024 y-o-y): 6.3 percent. - Oil output (2024): 9 mbpd. - Oil GDP change (2024): -4.4 percent. - Overall real GDP growth (2024): 2 percent. - Q1 2025 non-oil y-o-y GDP change: 4.9 percent. - Headline inflation (May 2025): 2.2 percent. - Rent inflation (y-o-y): 8 percent. - Unemployment rate for Saudi nationals (2024 Q4): 7 percent. - SAMA net foreign assets (end-2024): $415 billion. - NFA coverage: 15 months of imports; 187 percent of IMF reserve adequacy metric. - Banking regulatory capital ratio (end-2024): 19.6 percent. - Banking Tier 1 capital ratio (end-2024): 18.3 percent. - Return on assets (end-2024): 2.2 percent. - Return on equity (end-2024): 15 percent. - Nonperforming loans (end-2024): 1.2 percent of total loans. - Fiscal deficit (2024): 2.5 percent of GDP. - Debt-to-GDP ratio (2024): 26.2 percent of GDP. - Net debt (2024): around 17 percent of GDP. - 2024 debt issuance by central government: $17 billion. - 2024 debt issuance by PIF: $9.8 billion. - Non-oil export growth (Q1 2025): 13.4 percent y-o-y. *International Monetary Fund — Saudi Arabia, 1. New Methodology of National Account Statistics (source PDF).* ### 1. New Methodology of National Account Statistics _______________________________________________6 ### 1. New Methodology of National Account Statistics ### Major findings on methodology update - In May 2025, GASTAT released updated GDP statistics incorporating a comprehensive methodological revision (mostly within-sector revisions) and rebase from 2018 to 2023. - The update builds on chain-linked real GDP enhancements published in 2024 and integrates IMF technical assistance recommendations from 2019–2024. - IMF staff assessed the updated methodology and base year as generally consistent with international best practices and the 2008 UN System of National Accounts. - Minor issues remain for future SUT revisions, including shifts in intermediate consumption patterns across industries and changes in value-added-to-output ratios. ### Key methodological changes and implications - Supply and use table (SUT) enlargement: - Industry and product classification expanded from 85x85 to around 300x300. - Coverage now includes 134 economic activities, compared to 85 previously. - Expansion enabled by enhanced input data from comprehensive economic, household, expenditure, labor force, and agricultural surveys. - Real GDP benchmarking: - Real GDP benchmark updated from 2018 to 2023, aligning real and nominal GDP levels for 2023. - Higher GDP levels from rebasing: - New rebased nominal GDP level is 14 percent higher in 2024 than previously estimated. - New rebased non-oil GDP level is 20 percent higher in 2024 than previously estimated. - Non-oil economy’s share (including net taxes on products) rose from 72 to 76 percent. - Policy implications: - Vision 2030 targets are expected to be revised across ministries. - The new series offer more informed guidance for policy formulation and decision-making. ### Recent economic developments (post-rebasing context) - Growth and sectoral performance: - Non-oil real GDP expanded by 4.5 percent in 2024 (newly rebased series). - Non-oil private investment grew 6.3 percent year-on-year in 2024. - Oil output remained at 9 mbpd in 2024, the lowest level since 2011, due to repeated OPEC+ production cuts. - Oil GDP declined by 4.4 percent in 2024. - Overall real GDP growth in 2024 was 2 percent. - Q1 2025 Q1 GDP release showed a 4.9 percent y-o-y increase in non-oil activities. - Inflation and wages: - Headline inflation reached 2.2 percent in May 2025. - Housing rent inflation slowed to 8 percent y-o-y (seventh consecutive month of deceleration). - Real wage growth was flat overall; wages in service industries and for highly skilled workers increased by about 6 percent in real terms. - Labor market: - Unemployment rate for Saudi nationals declined to 7 percent in 2024 Q4. - Private sector employment increased by 12 percent on average in 2024, driven mainly by higher female employment. - Construction sector labor force rose by 24 percent, largely fueled by non-Saudi workers. - External sector and reserves: - Current account registered a deficit of 0.5 percent of GDP in 2024, down from a 2.9 percent of GDP surplus in 2023. - Drivers of the current account reversal: decline in oil export proceeds; higher imports of machinery and equipment; stronger remittance outflows (remittances accounted for one fifth of the deterioration); partially offset by significantly expanded tourism inflows. - SAMA net foreign assets (NFA) stabilized at $415 billion by end-2024. - NFA adequacy: covers 15 months of imports and 187 percent of the IMF’s reserve adequacy metric. - Q1 2025 trade data suggested continued deterioration despite non-oil export growth of 13.4 percent. - Banking and financial sector: - Aggregate regulatory capital ratio: 19.6 percent of risk-weighted assets (end-2024). - Tier 1 capital ratio: 18.3 percent of risk-weighted assets (end-2024). - Return on assets: 2.2 percent (end-2024). - Return on equity: 15 percent (end-2024). - Nonperforming loans: 1.2 percent of total loans (end-2024). - Liquidity indicators remain adequate though liquid assets to short-term liabilities ratio has been declining. - Fiscal and sovereign issuance: - Overall fiscal deficit widened to 2.5 percent of GDP in 2024 (0.8 percent of GDP above the budget target based on revised GDP figures). - Non-oil primary balance improved by close to 0.7 percentage point of non-oil GDP, helped by higher non-oil revenue. - Revenue administration efficiency contributed 0.2 percent of non-oil GDP from fines and penalties. - Debt-to-GDP ratio rose by about 3 percentage points to 26.2 percent of GDP. - Net debt remained around 17 percent of GDP. - In 2024, the central government and the sovereign wealth fund (PIF) raised $17 billion and $9.8 billion, respectively. - Market conditions: - Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets (excl. China) in 2024 and the largest dollar-denominated Sukuk issuer globally. - Saudi sovereign spreads tightened following bond issuances, suggesting market confidence in fiscal policy sustainability. - Despite record new listings, the Tadawul All Share Index underperformed the S&P 500 since mid-2023 and remained relatively flat over the past 12 months. ### Quantitative summary (selected exact figures from source) - SUT classification: expanded from 85x85 to around 300x300; now covering 134 economic activities. - Rebase year: from 2018 to 2023. - Nominal GDP (2024) revision: 14 percent higher than previously estimated. - Non-oil GDP (2024) revision: 20 percent higher than previously estimated. - Non-oil real GDP growth (2024): 4.5 percent. - Non-oil private investment growth (2024 y-o-y): 6.3 percent. - Oil output (2024): 9 mbpd. - Oil GDP change (2024): -4.4 percent. - Overall real GDP growth (2024): 2 percent. - Q1 2025 non-oil y-o-y GDP change: 4.9 percent. - Headline inflation (May 2025): 2.2 percent. - Rent inflation (y-o-y): 8 percent. - Unemployment rate for Saudi nationals (2024 Q4): 7 percent. - SAMA net foreign assets (end-2024): $415 billion. - NFA coverage: 15 months of imports; 187 percent of IMF reserve adequacy metric. - Banking regulatory capital ratio (end-2024): 19.6 percent. - Banking Tier 1 capital ratio (end-2024): 18.3 percent. - Return on assets (end-2024): 2.2 percent. - Return on equity (end-2024): 15 percent. - Nonperforming loans (end-2024): 1.2 percent of total loans. - Fiscal deficit (2024): 2.5 percent of GDP. - Debt-to-GDP ratio (2024): 26.2 percent of GDP. - Net debt (2024): around 17 percent of GDP. - 2024 debt issuance by central government: $17 billion. - 2024 debt issuance by PIF: $9.8 billion. - Non-oil export growth (Q1 2025): 13.4 percent y-o-y. *International Monetary Fund — Saudi Arabia, 1. New Methodology of National Account Statistics (source PDF).* ### 10. Amid heightened uncertainty and weakened commodity prices, robust domestic ### Amid heightened uncertainty and weakened commodity prices, robust domestic demand—including from government-led projects—will continue to drive growth ### Near-term growth outlook - Non-oil real GDP growth is projected at 3.4 percent in 2025, about one percentage point below 2024. - Overall real GDP is projected to accelerate to 3.6 percent in 2025. - Oil output is expected to reach 9.5 mbpd in July—up from 9 mbpd in Q1 2025—with further monthly increases following the original OPEC+ phase out schedule from August onwards. - Robust domestic demand drivers: - Continued implementation of Vision 2030 projects. - Strong credit growth sustaining domestic demand. - Trade linkages and tariff exposure: - Oil products are currently about 78 percent of Saudi Arabia’s goods exports to the U.S and are exempt from U.S. tariffs. - Non-oil exports to the U.S. account for 3.4 percent of Saudi Arabia’s total non-oil exports. ### Medium-term outlook and investment - Oil production path and capacity: - Oil production is expected to recover gradually to 11 mb/d by 2030—still below the maximum sustainable capacity of 12.3 mb/d. - Non-oil growth: - A modest increase in non-oil growth is anticipated in 2027 driven by investments for major events (2027 Asian Cup, 2029 Asian Winter Games, 2030 World Expo, 2034 FIFA World Cup). - Non-oil growth would converge towards 3.5 percent in the medium term. - Non-oil private investment growth supported by continued contributions from the PIF of at least $40 billion annually into the domestic economy. - Investment trends: - Continued phase-out of OPEC+ cuts and infrastructure-related investment underpin the medium-term outlook. ### External position and reserves - Twin deficits expected to persist over the medium term. - Current account deficit: - Expected to peak at about 3.4 percent of GDP by 2027 before converging to about 3.2 percent of GDP in 2030. - Financing and buffers: - Deficit increasingly financed through deposit drawdowns, less FX asset accumulation abroad, and higher external borrowing. - International reserve coverage would remain adequate at about 12 months import coverage over the medium term. - Foreign assets held by the PIF and other government-related entities provide strong additional buffers. - SAMA's NFA holding levels (US$ Billions): 417 415 419 422 420 422 428 437 (as shown in source table across projected years). - In months of imports (Next 12 months imports of goods and services): 15.8 14.9 14.1 13.3 12.6 12.2 11.8 12.1 (as shown in source table across projected years). ### Risks and downside scenarios - Downside risks to the near-term outlook include: - Weaker oil demand from heightened uncertainty, escalation of global trade tensions, financial instability, and geoeconomic fragmentation. - Fiscal deficits and debt pressures, weaker investor confidence, and costlier financing which could affect banks’ ability to rollover external debt. - Regional security risks causing supply chain and travel disruptions, dampening investor sentiment and tourism-driven diversification. - Sharp cuts in government-related entity spending could hinder private investment growth and slow diversification. - Upside risks include higher-than-expected oil production or additional investments linked to large-scale projects and Vision 2030. - Growth-at-Risk (GaR) findings (Box 2): - Baseline probability of recession (negative growth) for non-oil growth: 5.9 percent. - An oil price drop to below 30 $/b reduces mean non-oil growth by 0.7 percentage points and increases the probability of recession to 6.1 percent. - A one standard deviation negative shock to China’s real growth lowers Saudi’s mean growth by 0.22 pp and raises the probability of recession by 0.55 percentage points. - Other simulated shocks produce noticeable but minor effects, leading only to marginal adjustments in the distribution of non-oil growth. - Low oil price scenario (Box 2 and Annex VII): - A temporary shock to $40 per barrel is assumed for H2 2025 and 2026 before gradually recovering. - This sharp decline would significantly worsen the fiscal deficit, though existing buffers would help absorb some of the impact. - Lower import demand would mitigate pressure on foreign reserves, keeping them stable. - The PIF and other development funds are expected to maintain project pipelines and play a countercyclical role cushioning non-oil growth. ### Fiscal outlook and policy recommendations - 2025 fiscal stance: - The 2025 fiscal stance results in a deficit twice the budget target; staff projects the overall fiscal deficit at 4 percent of GDP in 2025. - The budget assumed savings of about 1.3 percent of GDP from one-off 2024 expenditures, but staff anticipates higher current expenditures than budgeted and lower oil-related revenues. - The outcome reflects a 3.6 percentage points of non-oil GDP improvement in the non-oil primary balance. - Staff considers no additional improvement in the non-oil fiscal balance necessary in 2025 to avoid procyclicality. - Medium-term fiscal path: - Overall fiscal deficit peaks at 4.0 percent of GDP in 2025, declining to about 3.2 percent of GDP by 2030. - Non-oil primary deficit would shrink by about 4.2 percent of non-oil GDP from 2025 to 2030. - Public debt-to-GDP ratio projected to increase to 40.6 percent by 2030, remaining consistent with a low sovereign debt risk. - Recommended medium-term consolidation: - An additional adjustment of approximately 3.3 percent of non-oil GDP between 2026 and 2030 to support progress toward the PIH-based fiscal anchor, assuming a 15-year transition period. - This adjustment should primarily rely on revenue measures and subsidy reforms. - Tax policy and revenue mobilization priorities: - Close the tax gap with the G20 average estimated at about 10 percent of GDP over time. - Tax policy measures recommended include: - Assess impact of international tax agreements and expand the VAT base—including unregistered e-commerce transactions. - Remove VAT exemptions on home purchases and real estate transactions. - Introduce a property tax (Box 3). - Introduce a personal income tax. - Reform excise duties (including for luxury and environmentally harmful items). - Reform corporate taxation to strengthen revenue generation. - Revenue administration measures recommended include: - Maintain mandatory e-invoicing, risk-based auditing, and tax awareness campaigns. - Avoid renewing the temporary tax penalty waiver introduced repeatedly since Covid. - Undertake the upcoming Tax Administration Diagnostic Assessment Tool (TADAT) assessment to prioritize improvements. - Property tax potential (Box 3): - Recurrent property tax could raise revenue around 1 percent of GDP (reference: Morocco raises 0.95 percent of GDP). A revenue around 1 percent of GDP would exceed the MENA average but remain below the OECD average (1.4 percent). ### Authorities’ views - Authorities emphasize that economic transformation, structural reforms, prudent policies, and recalibration have strengthened resilience. - Authorities project non-oil real GDP growth to reach 4–5 percent over the medium term, outperforming staff estimates. - Authorities view staff projections for the current account deficit as conservative, citing expectations of stronger non-oil exports, moderated import growth due to local content requirements, and existing stock of previously imported capital goods. - Authorities highlighted substantial fiscal buffers and available policy space to absorb temporary oil price shocks and viewed external and fiscal risks as broadly balanced. *Source: IMF staff report excerpt (provided content).* ### 0.1 percent of GDP ### 0.1 percent of GDP ### Revenue measures - Revising existing tax incentives including in SEZs and revisiting the room for introducing corporate income tax for Saudi and GCC companies considering the existence of Zakat — 0.1 percent of GDP - Amending the white land tax — 0.01-0.02 percent of GDP - Further tax administration reform (improvements in e-invoicing, compliance, and efficiency) — unspecified incremental gains - Aggregate estimate: Total of revenue and expenditure measures 6.6-8.5 percent of GDP (8.7- 11.3 percent of non-oil GDP) ### Expenditure measures and priorities - Accelerating the energy subsidy reform — 3.5 percent of GDP - Further rationalizing expenditure—delaying low priority projects and items with low long-term fiscal multipliers — 0.5-1.0 percent of GDP - Additional expenditure measures (unspecified individual line items) — 0.5 percent of GDP - Spending rationalization tools: - Wage bill management: strategic workforce planning, structured salary and allowance system, Golden Handshake program, attrition-based measures, incentives for sabbatical leaves, a redeployment platform, reinforced bonus regulations. - Better targeting: wealth-based eligibility criteria for the Citizen’s Account and shift toward the means-tested cash compensation Damaan program. - Spending prioritization: reduce current expenditures with low priority/limited long-term fiscal multiplier while preserving medium-term growth-augmenting infrastructure investments; communicate consistency with Vision 2030 and conduct regular spending reviews. ### Recurrent property tax (Box 3 conclusion) - Two approaches to assessing property values: (i) value-based assessments (market transactions) and (ii) area-based assessments (size of land/buildings). - Value-based assessment preferred where property markets are efficient and valuation capacity exists. - For Saudi Arabia, Computer-Assisted Mass Appraisal (CAMA) recommended as cost-effective for valuing large numbers of residential properties. - Recurrent property tax prerequisites: - Up-to-date cadaster with building description, taxpayer details, valuation, and physical address. - Georeferenced satellite imagery for mapping taxable properties; door-to-door surveys to complement imagery. - Incorporation of data into GIS maps with photographs. - Building on the 2020 tax on vacant land could facilitate introduction of a recurrent tax on real estate linked to market values, with possible relief for lower-value houses. ### Energy subsidy reform and fuel pricing - Recent domestic fuel price increases and lower international oil prices reduced fuel subsidies (government compensation to Aramco) from 4.4 percent in 2023 to 3.5 percent of GDP in 2024. - Doubling of diesel prices since January 2024 noted. - Policy recommendations: - Lift the gasoline price cap to allow regular gasoline prices to fluctuate with international prices. - Accelerate price increases in other fuel products (e.g., diesel) to ensure full energy subsidy removal by 2030 as envisaged in the 2030 Vision reform agenda. - Clear communication of timeline and magnitude of adjustments. - Social support through planned scale up of the well-targeted Damaan program expected to be sufficient for vulnerable groups. ### Contingency planning, buffers, and debt management - In a significant and permanent oil price decline: recommend a more aggressive fiscal consolidation strategy, prioritizing projects to extend or cut; consider asset divestment and raising the VAT rate further if needed. - In a temporary oil price shock: recommend partial drawdown of fiscal buffers (e.g., central government deposits held at the central bank) to smooth transition; caution on drawing down public sector deposits in commercial banks due to sovereign-bank nexus risks. - Central government deposits were about 9.3 percent of GDP in 2024. - Recommendation to complement medium-term debt strategy with a full cost-benefit analysis of financing strategies (including Giga projects), and to prepare an optimal cash buffer policy, regularly assessed. - Encourage operationalizing a comprehensive sovereign asset liability management (SALM) framework including government-related entities and regular PIF risk assessment and stress testing. ### Strengthening fiscal institutions and governance - Reinforce transparency and fiscal planning: - Greater clarity on medium-term investment plans, financing, and implications of fiscal space recalibration. - Move to a five-year MTFF and setting spending ceilings until 2030 noted; need for better integration of multiyear projections into annual budgets. - Publish consolidated balance sheet and a broader measure of the fiscal position including public-related entities. - Operationalize and ensure compliance with an expenditure-based fiscal rule; consider creation of an independent institutional body (e.g., a fiscal council). - Strengthen budget execution, cash management, and expenditure classification: - More realistic revenue and expenditure forecasts; close monitoring of project execution; consider mid-year supplementary budgets. - Streamline public sector accounts in line with Treasury Single Account reforms. - Continue efforts to accurately classify current and capital expenditures. - Enhance investment efficiency: - Coordinate Spending Efficiency Key Elements Program (SEKAP) with MISA’s cost-inflation exercise. - Improve project design and appraisal, assessment and monitoring resources, and timely payments to contractors (within the 40-day limit). - Consider IMF’s Public Investment Management Assessment (PIMA). - Enhance fiscal risk analysis: - Broaden internal fiscal risk dashboard to cover large state-owned sector and significant assets. - Close oversight of contingent liabilities (giga projects financing obligations, debt guarantees, PPPs). ### Pension reform - Pension reform adopted in July 2024 raises the retirement age, required contribution periods, and contribution rates while tightening pension benefits. - Immediate fiscal savings unlikely as the system is currently balanced; medium-term impact should be fully accounted for and communicated. - Upcoming voluntary pension and savings scheme open to Saudis and foreign workers aims to increase household savings and potentially reduce remittance outflows. - GOSI assets amount to 32 percent of GDP; recommendation to improve transparency through enhanced financial disclosure and allocation rules. ### Authorities’ views (summarized) - Authorities reaffirm commitment to fiscal discipline, transformation continuity, and avoiding procyclical policy amid oil price fluctuations. - Intend to adhere to the 2025 announced expenditure even with lower oil revenues, describing this as strategic and supported by fiscal buffers. - Support accelerating non-oil revenue mobilization via broadening the tax base and improving tax administration. - Acknowledge possible modest rise in public debt but state that debt levels remain low by international standards and fiscal sustainability is secure. - Emphasize maintaining government deposits at considerable levels as percent of GDP; deposits at the central bank should only be drawn under exceptional circumstances. - Regular debt issuance remains a priority to strengthen domestic capital markets and maintain market access. ### Monetary and exchange rate policy - Currency peg to the U.S. dollar remains appropriate given Saudi Arabia’s economic structure. - Peg provides a credible anchor for monetary policy, supported by ample external buffers. - SAMA policy rate decisions should continue to align with the Federal Reserve. - Liquidity conditions adequate despite volatility in the interbank market; three-month SAIBOR-SOFR spread fluctuated from under 90 basis points to over 140 basis points over the past twelve months. - Recommendations for liquidity management: - Continue refining liquidity management framework and use market-based instruments to smooth short-term liquidity imbalances. - Implement new data-sharing arrangement between the Ministry of Finance and SAMA on expected government flows. - Reform reserve requirement regime (e.g., review maintenance window) and rationalize maturities of term repos and SAMA bills to strengthen monetary policy transmission and market development. ### Financial sector policies and risks - Systemic vulnerabilities remain low; all banks meeting prudential requirements though strong credit growth requires vigilance. - SAMA stress tests confirm resilience to a low oil price scenario and economic slowdown. - Systemic risks from nonbank financial institutions minimal given their share is less than 5 percent of total financial sector assets. - Strong credit growth driving funding pressures and changes in banks’ funding structure: - Banks diversifying liabilities via subordinated debt, syndicated loans, certificates of deposit. - Banks’ external liabilities reached SAR486 billion by end-April 2025 (10 percent of total bank liabilities). - Banks’ NFA turned negative in mid-2024 for the first time since 1993 and expected to continue declining as banks secure additional external funding. - High share of deposits from government-related entities plateaued around one-third of total bank deposits over the past year; increase since 2022-23 requires monitoring. - Policy focus: monitor loan-to-deposit ratios, external liabilities, and preserve financial stability while managing credit growth. *Source: INTERNATIONAL MONETARY FUND.* ### 33. Addressing strong credit growth and ### 33. Addressing strong credit growth and the resulting funding pressures ### Rapid credit growth, funding pressures, and macro‑financial vulnerabilities - Staff supports SAMA’s ongoing review of its prudential toolkit to counter risks from rapid credit expansion amid a widening credit-to-deposit gap and banks’ increasing reliance on short-term external wholesale funding. - Given the expectation of sustained high loan demand relative to available funding, setting prudential requirements aligned with evolving risks is essential. - The introduction in May 2025 of a 100-basis-point countercyclical capital buffer (effective within one year) is timely and welcome. - Vulnerabilities in a context of lower oil prices and tight financial conditions would be further mitigated by: - Tighter borrower-based measures: staff welcomes the authorities’ ongoing review of loan-to-value (LTV) and debt-service-to-income (DSTI) limits and calls for lowering these limits, which are high in international comparison. DSTI limits in Saudi Arabia are 65 percent for income with mortgage subsidies and 55 percent for income without subsidies. The revised limits should be phased in gradually to prevent unintended disruptions in the housing market. - Measures to discourage risky non-deposit funding sources, particularly short-term external borrowing: SAMA’s proactive oversight of the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) for foreign currency exposures is welcome; setting these ratios as regulatory requirements should be considered. While banks’ exposure to foreign exchange risk remains low, introducing prudential limits on net foreign exchange positions could further safeguard financial stability. Adjusting SAMA’s regulatory loan-to-deposit ratio by reducing the weight of foreign currency funding could discourage reliance on short-term external borrowing. - Enhanced bank supervision: SAMA’s internal review should lead to improved risk-based supervisory methods, including upgraded internal systems, data templates, and supervisory cycle. SAMA should continue the ICAAP and ILAAP processes and be ready to impose prudential requirements on individual banks based on those assessments. ### Regulatory, monitoring, and crisis preparedness advances - Good progress is being made in strengthening Saudi Arabia’s banking regulatory and supervisory framework, in line with the 2024 FSAP recommendations. - Key advancements include: - Banking regulation: The draft Banking Law, addressing many FSAP concerns—particularly by enhancing the central bank’s corrective and sanctioning powers—has been submitted to the legislative body. Staff urges its swift adoption to ensure operational and supervisory changes are fully incorporated. - Systemic risk analysis and monitoring: Efforts to close data gaps have progressed, including the launch of a comprehensive real estate price index in November 2024. Work is underway to develop a financial sector interconnectedness map. A framework to monitor the financial system’s exposure to large construction and other giga projects is being introduced. - Contingency framework: Notable advancements in bank resolution include establishment of a new department, recruitment of additional staff, and preparation of implementing regulations and rules. The regulatory framework for emergency liquidity assistance (ELA) has been drafted; adopting and operationalizing the ELA regulation without unnecessary delays would be important. ### AML/CFT supervision - Ahead of the AML/CFT assessment by the FATF in 2026, SAMA remains committed to enhancing AML/CFT supervision of the financial sector. - Actions under way: - Improving AML/CFT risk tools to collect and analyze risk-related data from financial institutions. - Increasing thematic inspections on suspicious transactions reporting, monitoring of politically exposed persons, and verification of beneficial owners. - In 2025, SAMA expects to further enhance AML/CFT supervision, especially comprehensive risk assessments of various sectors, and plans engagement with the private sector via roundtables, workshops, and training. ### Capital market development and diversification of funding - Expanding Saudi Arabia’s capital market is essential to diversifying funding sources and reducing reliance on bank financing. - Current market characteristics and reforms: - Market remains dominated by large government-related issuers, limited free float, retail-driven trading, and close ties to oil price dynamics. - New IPOs and improved access for international investors—including revised account opening rules for GCC nationals and expanded access via local brokers—are expected to enhance liquidity. - Recent reforms: Updated Investment Law (February 2025), ongoing pension and savings reforms, streamlined documentation requirements, and establishment of a market making regime. - Recommendations to deepen markets: further easing restrictions on qualified foreign investors; creating a market for qualified professional investors where private placement bonds can be freely traded; increasing use of asset-backed securities, especially mortgage-backed; and the establishment of a local rating agency (Tasnif) to improve financial information and investment decisions. ### Authorities’ views - Authorities highlighted strong fundamentals and resilience of the banking sector even under severe stress scenarios, including large oil price shocks. - Immediate priority is preventing vulnerabilities associated with rapid credit growth and related funding pressures. - In addition to the recently introduced CCyB, authorities emphasized readiness to further tighten macroprudential ratios, including to address risks from short-term foreign exchange funding. - Authorities noted significant progress in banking supervision and regulatory frameworks, prioritization of the draft new banking law (already submitted for legislative approval), advancements in crisis management and AML/CFT measures, and ongoing efforts to close data gaps and develop monitoring of banks’ exposure to giga projects. ### Structural reforms: progress, priorities, and growth impact - Heightened global uncertainty reinforces urgency of accelerating structural reform efforts. - Key facts and achievements: - FDI inflows are currently at 1.6 percent of GDP, below the Vision 2030 original target of 5.7 percent of GDP. - Non-oil total factor productivity remains stagnant; weaknesses in patenting and high-tech exports persist. - Several new laws effective in 2025—including the updated Investment Law (enacted in February 2025), Labor Law amendments (enacted in February 2025), and the new Commercial Registration Law (effective May 2025)—strengthen contractual certainty and support productivity gains. - Staff estimates that continuing reform efforts and effective implementation could boost growth by an additional 1.0-1.5 percentage points per year over a five-year period. - Key reform priorities and recommendations: - Regulatory and business environment: Enforce the updated Investment Law; leverage digital platforms to streamline procedures and reduce administrative costs; finalize streamlining of existing fees and levies; implement a regulatory impact assessment framework. - Labor market reforms: February 2025 Labor Law amendments, expanded training, affordable childcare, and flexible work schedules are expected to enhance labor productivity and female labor force participation (female labor force participation is 36 percent). Implement the Labor Market Strategy 2025–2030, including the National Skills Strategy and job-matching ecosystem reforms; ensure equal access to skilled labor for both large companies and SMEs; shift strategy focus from quantity to quality. - SME access to finance: SMEs account for over 60 percent of the private sector workforce, with 45 percent of leadership positions held by women. SME lending rose from 5.8 percent in 2018 to 9.4 percent in 2024, underscoring the need for additional measures to reach the Vision 2030 target of 20 percent. Recommendations include enhancing credit infrastructure (collateral registries), shifting to risk-based guarantees, advancing securitization and fintech innovation, and complementing with the National Strategy for Saving, Financial Inclusion, and Literacy. - Improving governance: Nazaha by-laws (enacted November 2024) strengthened the legal framework, introduced stricter penalties, broadened corruption definitions, enhanced investigative powers, and paved the way for an asset declaration framework. New Ultimate Beneficial Ownership rules (enacted in April 2025) define UBOs and clarify obligations for companies. An anti-corruption strategy has been approved and is expected within 2–4 years. - Deepening regional trade integration: GCC intra-regional trade stands at around 10 percent of total exports; removing non-tariff barriers and addressing logistics and financing bottlenecks would expand non-oil exports within the GCC and enhance re-export potential. ### Public Investment Fund (PIF), industrial policy, and crowding‑in private investment - Targeted interventions by PIF should prioritize crowding in private sector investment and advancing economic diversification. - Current characteristics and recommendations: - PIF remains largely domestic, with 97 percent of its consolidated revenue tied to Saudi entities. - PIF’s countercyclical role is welcome; recurrent recycling of capital exercises and plans to evaluate stake holdings in mature companies are positive for transparency and creating space for private investors. - Staff advises a comprehensive assessment of existing government-entities’ holdings to determine if further divestment is needed, including conducting projects through more PPPs. - Industrial policies should be cost efficient, include exit criteria, claw-back mechanisms, and sunset clauses to prevent persistence after objectives are met. Operations within SEZs, including incentives related to tax, local content, and Saudization requirements, should be regularly assessed relative to domestic and global policy considerations to minimize distortions. *Source: IMF staff assessment and recommendations as presented in the provided content unit.* ### 42. Saudi Arabia’s data provision remains broadly adequate for surveillance (Annex XI). Staff ### Saudi Arabia’s data provision remains broadly adequate for surveillance (Annex XI) ### Data provision and statistical progress - Staff welcomes the authorities’ commitment to advancing toward SDDS+, positioning Saudi Arabia as the only MENA country pursuing this standard. - Recent statistical improvements: - GDP rebasing (Box 1). - An expanded Household Income and Expenditure Survey—now five times larger. - Publication of new environment statistics in December 2024. - Ongoing initiatives: - Enhancements to the CPI and WPI. - Expansion of sectoral data. - Development of climate statistics. - Continued efforts by SAMA to improve coverage and granularity of Balance of Payments (BOP) and International Investment Position (IIP) data—critical for bilateral and multilateral surveillance and for preparations to join SDDS+. ### Authorities’ views - Authorities reiterated an unwavering commitment to structural reforms despite global uncertainty and oil market volatility. - Overarching objectives: - Drive non-oil sector growth, enhance productivity, and accelerate economic diversification. - Strengthen human capital and align labor supply with market needs. - Maintain momentum in improving the business environment. - Authorities noted rising investor confidence driven by: - Capital market reforms. - More legal certainty. - Improved access for foreign investors—expected to help boost FDI and other foreign investment. - On industrial policy: - Targeted interventions by the PIF and public entities will continue to play a catalytic role in strategic sectors where private investment remains limited. ### Staff appraisal — macroeconomic resilience and outlook - Key assessments: - Despite elevated global uncertainty and external shocks, Saudi Arabia’s economy has shown strong resilience, supported by domestic demand and ongoing diversification efforts. - The non-oil economy is expanding, inflation is contained, and unemployment remains at record lows. - Lower oil revenues and investment-driven imports have resulted in twin deficits that will persist over the medium term, but external and fiscal buffers remain ample. - Staff assesses the external position in 2024 as broadly in line with medium-term fundamentals and desirable policies. - The outlook remains strong, with risks to the downside. ### Fiscal policy guidance and contingency planning - 2025 fiscal stance: - Maintaining a less procyclical fiscal stance in 2025 remains important to support growth and avoid magnifying the impact of large oil price fluctuations. - With substantial fiscal buffers and effective frontloading of fiscal consolidation—as measured by the marked improvement in the non-oil primary balance—the projected deficit for 2025 remains appropriate, despite exceeding budget targets. - Additional adjustment in response to lower oil revenue would be unwarranted, as it would make fiscal policy procyclical when support is needed. - Contingency planning options to safeguard fiscal sustainability: - More aggressive consolidation and project reprioritization (in the case of a significant permanent decline in oil prices). - Partial use of fiscal buffers (in the case of a temporary shock). ### Medium-term fiscal reform and revenue measures - A gradual fiscal consolidation will remain necessary over the medium term to achieve intergenerational equity. - Recommended further reforms and actions: - Strengthen non-oil revenue mobilization—particularly sustain recent progress in revenue administration. - Contain the wage bill. - Broader tax policy reforms, including: - Removing exemptions. - Reforming corporate taxation. - Introducing a property tax. - Ending tax penalty waivers. - Accelerate elimination of energy subsidies—especially by removing the cap on gasoline prices. - Move toward better-targeted social safety nets. - Leverage ongoing spending reviews to further prioritize and streamline non-essential expenditures. ### Fiscal institutions and sovereign balance sheet management - Priorities to support fiscal adjustment and Vision 2030 objectives: - Enhance the Medium-Term Fiscal Framework—better integrate multi-year projections into annual budget preparations to align spending ceilings with fiscal forecasts. - Operationalize and ensure compliance with an expenditure-based fiscal rule to anchor the fiscal stance over the medium term. - Improve budget execution, investment efficiency, broader coverage in fiscal data, and fiscal risk analysis, including of contingent liabilities. - Operationalize a comprehensive sovereign asset-liability management framework to improve oversight of sovereign balance sheet exposures. ### Monetary policy and exchange rate regime - The currency peg to the U.S. dollar remains appropriate; it provides a credible anchor for monetary policy and is backed by ample external buffers. - With an open capital account, SAMA’s policy rate should continue to align with the Fed’s policy rate. - SAMA’s market-based monetary operations should remain focused on smoothing short-term liquidity without fueling asset and credit growth. - Improvements in the liquidity management framework are welcome and should be further enhanced to strengthen monetary policy transmission. ### Financial sector stability and regulatory progress - Systemic vulnerabilities and resilience: - Systemic financial sector vulnerabilities remain low. - Continued progress in regulatory and supervisory reforms. - SAMA’s latest stress tests confirm that banks are well-positioned to weather low oil prices and slower growth. - Notable advances: - Submission of the new Banking Law for legislative approval. - Refinement of risk-based supervision. - Launch of a monitoring system for large construction and infrastructure projects. - Operationalization of SAMA’s bank resolution function is underway. - Efforts to finalize a crisis management framework—including emergency liquidity assistance—should continue without delay. - Further enhancements to AML/CFT supervision, such as thematic inspections, are welcome. ### Macroprudential measures and market development - Addressing strong credit growth and funding pressures: - Staff welcomes SAMA’s ongoing review of its prudential toolkit to respond to persistent double-digit credit growth and increased resort to short-term external wholesale funding. - The May 2025 introduction of a 100 basis points countercyclical capital buffer is welcome. - Additional recommended measures: - Narrow loan-to-value and debt burden ratios. - Tighten loan-to-deposit ratio guidelines to discourage excessive short-term foreign exchange funding. - Formalize monitoring of the LCR and NSFR in foreign currency as regulatory requirements. - Consider establishing limits on net foreign exchange positions. - Deepen the capital market to help diversify funding sources. ### Structural reforms and private sector development - Continue structural reform momentum irrespective of oil price developments. - Recent improvements: - Legislative enactments such as the updated investment law and a strengthened governance framework—these reinforce contractual certainty, level the playing field between domestic and foreign investors, and increase transparency. - Further actions to support productivity and private sector growth: - Greater clarity on Vision 2030 spending objectives to anchor investor expectations. - Continue improvements in regulatory and business environment. - Strengthen human capital, including better alignment of labor supply with evolving market needs. - Increase female labor force participation. - Expand SME access to finance. - Further governance enhancements and deeper regional trade integration. - Guidance on industrial policy: - Targeted interventions through industrial policies should complement—not replace—structural reforms, must avoid crowding out private sector investment, and be regularly reviewed. *Source: IMF staff assessment as presented in the provided content.* ### 52. It is recommended that the next Article IV takes place on the standard 12-month cycle. ### 1sauea2025001-source-pdf - 52. It is recommended that the next Article IV takes place on the standard 12-month cycle. ### Real sector developments - OPEC+ production cuts have reduced oil production, while non-oil GDP sustained growth momentum driven by wholesale, finance, real estate, and government services. - Demand-side decomposition and contributions to growth show: - Real GDP series (as presented): Real GDP12.00.52.03.63.93.53.43.33.3 - Sectoral contributions to non-oil real GDP growth (selected series visually shown across 2022–2024). - Oil production and exports (Million barrels per day; charted monthly to Mar-2025) presented in the source graphics. - Indicators of demand and activity: - Purchasing Managers' Index (SA, 50+= expansion): PMI New Orders and PMI Total Economy series through Mar-2025 (expansion threshold = 50). - Point-of-Sale Transactions and ATM Withdrawals (SAR Billion) series through Mar-2025 (POS transactions and ATM withdrawals rising). ### Inflation developments - Headline and core inflation reached low levels, with housing (rents) dominating contributions. - Key series and contributions (year-on-year changes) as shown in source charts: - Contributions to Inflation (Y-o-y change in the CPI): Rent, Core, Food and Beverages, Total CPI through Feb-25. - Contributions to Inflation by category (Food and Beverages; Housing, water, electricity & other fuels; Transport; Restaurant and hotels; Other). - Real estate contributions to inflation (Residential properties, Commercial properties, Agricultural Properties, Total Real Estate) through 2024Q4. - Wholesale Price Index and Consumer Price Index (CPI: Food and Beverages) (Y-o-y percent change) through Feb-25. - Food Price Indices: Saudi Arabia vs World (RHS) series through Jan-25. - Inflation forecasts (Average CPI) plotted for 2024–2029 showing: - IMF staff and Consensus Forecasts (Mean, High, Low); Consensus Forecast May 2024 referenced. ### Monetary and financial sector developments - Monetary policy tracks the U.S. rate cycle with SAMA repo and US Fed Funds policy rates charted through May-25. - Key monetary and liquidity indicators: - Banks' Excess Reserves + SAMA Bills and Banks' Excess Reserves (Excess Liquidity in Banking Sector, percent of bank assets). - Money Supply (M3, yoy) and Currency Outside Banks (USD billion RHS) through Mar-25. - Bank deposits composition in Riyal Million and Time & Savings to Deposits Ratio (RHS) through May-25. - Private Sector Credit and Deposit Growth (Y-o-Y percent change) and Loan-to-Deposit Ratio (RHS) through May-25. - Monetary survey highlights (Table 4, selected rows): - Foreign assets (net) (SAR billions): 1,736 1,607 1,520 1,545 1,561 1,560 1,573 1,599 1,636 - SAMA: 1,652 1,564 1,555 1,572 1,581 1,574 1,583 1,604 1,637 - Money and quasi-money (M3) (SAR billions): 2,495 2,685 2,921 3,193 3,454 3,701 3,930 4,152 4,384 - Money (M1) (SAR billions): 1,528 1,524 1,670 1,936 2,088 2,229 2,359 2,485 2,614 - Percent changes: Foreign assets (net)3.8-7.4-5.41.61.0-0.10.81.62.3; Domestic credit (net)12.618.817.114.110.59.68.07.56.8; Money and quasi-money8.17.68.89.38.27.16.25.75.6 ### Banking and financial soundness - Bank credit growth accelerated, with increased contributions from short-, medium-, and long-term credit. - Mortgage growth decelerated amid a high loan-to-deposit ratio; liquidity ratios remain adequate; profitability and capitalization are strong. - Selected indicators (from figures and Table 5): - Contributions to Bank Credit Growth (Y-o-y percent change) by loan category through May-25. - Bank Credit by Maturity (Y-o-y percent change) across maturities through Q1-2025. - Mortgage loans: Real Estate Loans by Bank Growth (y-o-y percent change) and Share in Total Lending to the Private Sector (RHS) series. - Loan-to-Deposit Ratio and Commercial Bank Deposits (Ratio, percent) series through May-25. - Liquidity and capital adequacy (Table 5, selected): - Regulatory capital to risk-weighted assets (percent): 19.5 20.4 20.3 19.3 20.3 19.9 19.9 20.1 19.6 (across years) - Tier-1 capital to risk-weighted assets and Return on Assets series displayed. - Gross NPLs to gross loans (percent): 1.4 1.6 2.0 1.9 2.2 1.9 1.8 1.5 1.2 (2016–2024) ### External sector developments - The current account shifted to a narrow deficit in 2024, driven by higher imports and lower oil exports. - Reserve accumulation was tepid; financial account shifted to small net inflows driven by external financing and less FX asset accumulation abroad. - Key balance of payments figures (Table 3, $ Billion and percent of GDP): - Current account: 150.4 33.5 -5.7 -32.5 -39.0 -46.9 -47.2 -48.8 -51.5 - (Percent of GDP)12.1 2.7 -0.5 -2.6 -3.0 -3.4 -3.3 -3.2 -3.2 - Trade balance: 235.3 128.2 90.3 56.7 50.2 43.3 37.3 32.1 23.7 - Exports: 411.2 320.2 305.6 287.4 299.0 312.9 324.7 337.2 346.5 - Oil exports: 327.0 247.4 223.4 195.5 199.6 207.0 212.2 217.6 219.6 - Imports (f.o.b.): -175.9 -192.0 -215.3 -230.7 -248.8 -269.5 -287.4 -305.1 -322.8 - Memorandum items: - SAMA's total net foreign assets (US$ billions): 440.5 417.1 414.5 419.3 421.6 419.7 422.1 427.8 436.6 - Net International Investment Position (% GDP): 62.8 62.8 59.3 55.9 50.7 44.9 39.4 34.3 29.5 - Oil price assumptions: WEO assumption and Average Saudi Arabian Light series provided in table. ### Fiscal developments - The overall fiscal deficit widened in 2024 despite an improvement in the non-oil primary balance; non-oil revenue continued increasing while oil revenue remained flat in 2024. - Key central government fiscal indicators (Table 2, selected): - Revenue (SAR billions): 1,278 1,212 1,259 1,172 1,134 1,184 1,177 1,234 1,284 1,336 1,378 - Oil revenue (SAR billions): 857 755 757 608 623 648 665 683 690 - Non-oil revenue (SAR billions): 421 458 502 526 555 587 619 653 688 - Tax revenues (SAR billions): 300 320 341 357 377 398 420 444 467 - Expenditure (SAR billions): 1,174 1,293 1,375 1,251 1,323 1,285 1,369 1,424 1,472 1,520 1,570 - Net lending (+) / borrowing (-) (Percent of GDP): 2.2 -1.8 -2.5 -4.0 -3.9 -3.7 -3.5 -3.2 -3.2 - Non-oil primary balance (percent of non-oil GDP): -25.3 -25.4 -24.7 -21.1 -20.3 -19.5 -18.6 -17.7 -16.9 - Central government gross debt / GDP (Percent): 21.3 23.0 26.2 29.8 32.6 34.9 37.0 38.8 40.6 ### Labor market developments - Unemployment rates trended downward to record lows for both Saudi nationals and expatriates; youth and Saudi nationals improved despite seasonal Q3 peaks. - Selected labor statistics (from figures and Table 1): - Unemployment rate (nationals): 9.7 8.5 7.4 (latest observations shown) - Unemployment rate (overall): 4.9 4.0 3.5 - Private sector employment: Saudi Nationals and Non-Nationals series in millions through Q4-2024. - Wage indicators: Average Monthly Wages (Overall) in Riyals series through Q4-2024; Gender wage gap and Wage Premium Over Non-Saudi (Percent) series. ### Projections and selected macro aggregates (Table 1 highlights) - Crude oil production (table formatting preserved): - Crude oil production (million of barrels per day) - 10.69.69.0 - 9.410.010.310.6 - 10.811.0 - Average oil export price (U.S. dollars per barrel) (table formatting preserved): 101.485.4 83.470.366.567.0 67.768.368.5 - Nominal GDP (SAR billions): 4,647 4,570 4,649 4,712 4,904 5,156 5,421 5,695 5,970 - Nominal GDP (US$ billions): 1,239 1,219 1,240 1,256 1,308 1,375 1,446 1,519 1,592 - Nominal non-oil GDP (SAR billions): 3,002 3,290 3,511 3,714 3,914 4,130 4,356 4,592 4,833 - Real GDP (percent change) (table formatting preserved): 12.00.52.03.63.93.53.43.33.3 - Consumer price index (avg) (table formatting preserved): 2.52.31.72.12.02.0 2.02.02.0 - Current account (percent of GDP) (Table 3): 12.1 2.7 -0.5 -2.6 -3.0 -3.4 -3.3 -3.2 -3.2 - Memorandum: SAMA's total net foreign assets (US$ billions) series noted above. *Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1sauea2025001-source-pdf.pdf* ### Annex I. Recommendations Made During ### Annex I. Recommendations Made During the 2024 Article IV Consultation ### Fiscal revenue mobilization - Recommendation: Accelerate non-oil revenue mobilization through a two-pronged strategy with tax policy and tax administration reform, with the development of a full-fledged medium-term revenue strategy. - Status / Key facts: - Non-oil revenue improved from 18.1 percent of non-oil GDP in 2023 to 18.6 percent in 2024 mainly due to efficiency gains in tax administration. ### Rationalizing spending and protecting the vulnerable - Recommendation: Rationalize spending through fuel subsidy reform, wage bill rationalization, while limiting the impact on the vulnerable population by scaling up targeted social programs. - Status / Key facts: - Expenditure overruns occurred in 2024 due to larger spending on transformational projects and some non-recurrent spending. - Diesel prices were increased by 44 percent in January 2025. - The cap on gasoline prices remains in place (capped since July 2021). - Higher social spending than the budget in 2024 reflected mostly increased allowances under the Citizen’s Account, which are expected to moderate in 2025 as they become more targeted. ### Public investment management and spending efficiency - Recommendation: Strengthen the public investment management framework and reinforce cost controls and maximize the return on priority projects. - Status / Key facts: - Recent steps to reduce fuel subsidies noted (diesel price increase referenced above); gasoline cap still in place. - Spending Efficiency Key Elements Program (SEKEP) currently covers 80 percent of budget entities and conducts regular assessment of cost pressures associated with budgeted capital projects. ### Fiscal institutions and transparency - Recommendation: Strengthen fiscal institutions by implementing a medium-term fiscal framework (MTFF), further strengthening budget preparation and execution processes, establishing a complete picture of the fiscal position (including the PIF), deepening fiscal risk analysis and management, and enhancing cash management through the Treasury Single Account. - Status / Key facts: - Authorities moved from a 3-year to 5-year MTFF in 2024. - Budget preparation and execution processes improved by including all government entities in the Etimad platform. - Progress in improving spending efficiency through SEKEP (covers 80 percent of budget entities). ### Fiscal rule and expenditure smoothing - Recommendation: Operationalize an expenditure-based fiscal rule based on a fiscal anchor derived from the permanent income hypothesis to prevent expenditure procyclicality and achieve intergenerational equity. - Status / Assessment: - Authorities’ current approach uses multi-year smoothing of oil prices, but staff notes it does not appear to prevent procyclicality of fiscal policy: the spending ceiling in the annual budget has been repeatedly revised and the link to the MTFF seems weak. - Staff acknowledges evolving spending needs for transformational projects and non-recurrent spending that is difficult to anticipate. ### Sovereign asset-liability management - Recommendation: Develop an effective sovereign asset-liability management framework. - Status / Key facts: - A public sector balance sheet incorporating financial assets and liabilities of key government-related entities as part of the preparation of a Sovereign Asset Liability Management Framework is being developed. - Work on the second phase is underway to include non-financial assets. ### Monetary policy and exchange rate peg - Recommendation: Conduct monetary policy to support the exchange rate peg. - Status / Key facts: - Monetary policy in 2024 was appropriate in containing inflationary pressures and supporting the peg. - The riyal has been pegged to the U.S. dollar at a rate of 3.75 since 1986 (context from Annex II). ### Emergency liquidity and banking sector resilience - Recommendation: Establish an emergency liquidity assistance framework. - Status / Key facts: - Not established yet but in progress. SAMA has drafted the regulation and is undergoing internal procedures. - Recommendation: Further strengthen banking regulatory and supervisory framework, address the existing data gaps, and strengthen AML/CFT supervision. - Status / Key facts: - SAMA launched a review of the current risk-based supervision framework to address relevant FSAP recommendations. - Once review completed, second phase will include updating data templates and internal system upgrades to reflect the revised framework and supervisory cycle. - Recommendation: Use macroprudential tools to forestall risks of a lending boom and address the existing data gaps in housing prices. - Status / Key facts: - A countercyclical capital buffer was introduced with effect from May 2026. - A comprehensive review of the existing DSTI limit is ongoing. - A new real estate price index was developed; work is ongoing on constructing affordability indicators. ### Business environment, labor market, and governance reforms - Recommendation: Accelerate the efforts to overhaul the business environment and eliminate regulatory barriers. - Status / Key facts: - Several measures introduced in 2025 to improve the business environment, including the new Commercial Registration Law and the new Law of Trade Names. - The Updated Investment Law of 2025 provides more options for dispute settlement, stronger investor and intellectual property protection, and ensures equal treatment of domestic and foreign investors. - Recommendation: Continue labor market reforms. - Status / Key facts: - The Labor Law was amended in 2025 to guarantee all employees equal access to professional opportunities and benefits, enhance the leave system, and require employers to formulate training and qualification policies. - Recommendation: Strengthen governance. - Status / Key facts: - Adoption of Nazaha’s by laws in November 2024 increases Nazaha’s powers and paves the way for preparation of an asset declaration framework. - New beneficial ownership rules were implemented in April 2025. - The whistleblower’s law was adopted in January 2024 and implemented since then. - The anti-corruption strategy has not been finalized; only its scope agreed and planned completion in two to 4 years while corruption indicators and targets are developed. ### Climate policy agenda - Recommendation: Advance climate policy agenda. - Status / Key facts: - Authorities communicated that Saudi Arabia’s National Determined Contribution (NDC) is to be updated by early 2026. - Operational capacity for renewables is at 5-6½ percent of the revised 2030 target, though reaching 34-40 percent of the target after accounting for tendered projects and those under construction. - Achieving NDC targets would require eliminating energy subsidies (diesel price increase noted; gasoline prices capped since July 2021) and deploying Circular Carbon Economy (CCE) technologies. ### Data adequacy for surveillance - Recommendation: Improve data adequacy for surveillance. - Status / Key facts: - Data adequacy has improved, particularly on national account coverage and GFS consistency. - Advancements in 2024 include GDP rebasing, enhanced household survey data, and new environment statistics. *Source: Annex I. Recommendations Made During the 2024 Article IV Consultation (extracted content).* ### Annex III. Figure 2. Saudi Arabia: Average Demeaned Spreads Around Bond Issuance Events ### Annex III. Figure 2. Saudi Arabia: Average Demeaned Spreads Around Bond Issuance Events ### Major findings on sovereign spreads - Saudi Arabia’s sovereign spreads have undergone significant changes over the past decade. - From being higher than those of its peers in earlier years, spreads have converged with the median of similarly rated countries since 2022. - Event-study findings demonstrate that Saudi Arabia’s spreads are not only resilient to large debt issuance events - so far - but also exhibit declining trends leading up to such issuances. - This market behavior underscores the confidence of investors in the Kingdom’s ability to manage its fiscal position and liquidity effectively. - Reference: Bloomberg and IMF staff calculations. ### Policy implications and strategic priorities - Maintain Fiscal Credibility: The government’s adherence to fiscal discipline has been a cornerstone of its success. Continued transparent communication of fiscal targets and adherence to medium-term fiscal frameworks will be critical to reinforcing market confidence. - Enhance Market Liquidity: Improving secondary market liquidity and diversifying the investor base could further reduce volatility and broaden access to international capital markets. - Monitor Global Shocks: Saudi Arabia remains exposed to global factors, such as fluctuations in oil prices and U.S. monetary policy tightening (IMF, 2022). Proactive scenario analysis and risk management strategies will help safeguard favorable funding conditions. *Source: Bloomberg and IMF staff calculations; excerpt from Annex III. Figure 2 and D. Conclusion.* ### 6. Focusing on the forecast errors, results indicate that countries with high ex ante ### 6. Focusing on the forecast errors, results indicate that countries with high ex ante ### Forecast errors and empirical findings - Countries with high ex ante fiscal spending overruns typically experienced lower-than-expected performance in: - overall real growth, - tourism receipts, - employment outcomes. - Interpretation: large-scale fiscal spending leading up to the event generally overestimated the long-term economic benefits of hosting; the gap between forecasted and actual outcomes points to potential inefficiencies in public investment, misallocation of resources, or overoptimistic growth assumptions embedded in pre-event projections. - Notes on empirical design: - Treatment group = high ex ante cumulative fiscal spending overruns. - High ex ante cumulative fiscal spending overruns cutoff is 1.7 percent. - Forecast errors are calculated as the actual – projection from vintage database as of year t-5. - Statistical significance notation: (1) *** p<0.01, ** p<0.05, * p<0.1. ### Robustness check - Alternative treatment: events with high ex ante public investment share (average share of public investment to total fixed capital formation during t-5 to t=0 above sample median). - Sample median = 20.6 percent. - Results: consistent with baseline but: - smaller DiD coefficients, - weaker statistical significance. - Interpretation: reduced significance may reflect greater variation in how effectively public investment was implemented. ### Policy implications for Saudi Arabia preparing to host major international events - Key priorities identified: - maintaining fiscal discipline, - enhancing the efficiency of public investment, - promoting private sector investments (including through public-private partnerships (PPPs)). - Rationale and specific concerns: - Avoiding fiscal overruns is important to preserve macroeconomic stability and avoid crowding-out essential spending in other sectors. - Improving the quality and targeting of public investments—especially in legacy planning of infrastructure—will help maximize returns and align outcomes with authorities’ expectations. - Encouraging greater private investment can share financial burden and bring innovation, technical expertise, and operational efficiency. - Expected long-term objectives: - ensure investments in tourism and infrastructure stimulate growth in the non-oil economy, - generate employment, - enhance the Kingdom’s global brand after events conclude. ### Risk Assessment Matrix — selected risk dynamics and policy responses - Likelihood taxonomy: “low” = probability below 10 percent, “medium” = between 10 and 30 percent, “high” = between 30 and 50 percent. - Selected global risks and staff-assessed likelihood/impact: - Regional conflicts: Likelihood = Medium; Expected impact = Medium. - Transmission channels: trade in energy and food, tourism, supply chains, remittances, FDI, financial flows, payment systems, refugee flows. - Policy response: fiscal policy and ensuring adequate banking system liquidity; trade and financial measures as needed. - Trade policy and investment shocks: Likelihood = High; Expected impact = Medium. - Policy response: anchor fiscal policy on a medium-term fiscal framework; use buffers for large shocks; monitor liquidity and banking stress; pursue structural reforms. - Commodity price volatility: Likelihood = Medium; Expected impact = High. - Policy response: medium-term fiscal framework; use fiscal and external buffers; structural reforms for diversification. - Selected domestic risks: - Weaker or stronger reform momentum: Likelihood = Medium; Expected impact = Medium. - Policy response: fiscal support while preserving sustainability; medium-term fiscal planning; monitor financial stability. - Disorderly energy transition: Likelihood = Medium; Expected impact = Medium. - Policy response: accelerate phasing out energy subsidies; strengthen diversification; adopt a fiscal anchor and fiscal rule to achieve intergenerational equity. ### Lower Oil Price Scenario — assumptions and macro impacts - Oil price shock assumptions: - Oil prices decrease to $40 per barrel in the second half of 2025 and 2026, before gradually returning to the baseline level of $68.5 per barrel by 2030. - This shock corresponds to a decline of about 50 percent relative to the baseline, and it roughly corresponds to 50 percent of the price decline experienced at the onset of the Global Financial Crisis of 2007-09. - Oil production path is kept the same as in the baseline for simplicity. - Macroeconomic impacts (exact projections): - Non-oil GDP growth: - assumed to weaken to 2.7 percent in 2025 and 1.9 percent in 2026, - baseline: 3.4 percent in 2025 and 3.5 percent in 2026. - Overall fiscal deficit: - would increase to 6.7 percent of GDP in 2025 and 10.4 percent in 2026, - baseline: 4.0 percent in 2025 and 3.9 percent in 2026. - Sovereign spread: - weaker investor confidence assumed to widen the sovereign spread on new external government debt issuances by approximately 150 basis points in the second half of 2025 and 2026, before gradually returning to baseline levels. - Central government gross debt: - assuming no drawdown of fiscal buffers, gross debt would increase to close to 60 percent of GDP over the medium term (against the baseline of about 41 percent in 2030). - Current account deficit: - would worsen in the short term to 5.5 percent of GDP in 2025 and 9.5 percent in 2026. - SAMA net foreign assets: - would fall to around 10.5 months of imports by 2030 (against around 12 months of imports in the baseline). - Financial sector: - banking sector would remain resilient with capital buffers above regulatory requirements; - banking sector liquidity and credit growth would weaken due to lower government and quasi government deposits that are correlated with oil prices. ### Policy options and adjustment scenario - Immediate policy options if shock occurs: - Partially draw down fiscal buffers (use part of public sector deposits, including central government deposits) to mitigate and smooth transition in temporary shock. - Staff estimates that using central government deposits held at the central bank would effectively mitigate the impact of the temporary oil price shock a year after the shock. - Accelerate non-oil revenue mobilization measures. - Delay some non-essential central government projects while sovereign wealth fund and development funds increase deployment of capital countercyclically. - Divest some assets and consider FX repatriation of deposits abroad or less FX asset accumulation abroad to stabilize net foreign reserves. - Illustrative “adjustment scenario” (assumptions and fiscal measures): - Central government uses half of its deposits (4.5 percent of GDP) during 2025-2026 to finance part of the fiscal deficit. - Fiscal consolidation measures with relatively small output impact: - Revenue measures: broadening the VAT base, increasing excises, and introducing a property tax—measures that would yield about 0.7 percent of GDP in each year following full implementation. - Expenditure measures: cuts in non-essential expenditures of about 0.7 percentage points of GDP in each year. - Combined effect: the deposit drawdown and these fiscal measures help reduce debt service relative to a no-adjustment path, supporting a return to baseline debt and fiscal balance trajectories over the medium term. - Caveats: - For a more persistent oil price shock, a more aggressive fiscal adjustment would be needed—including further broadening the VAT base and raising the VAT rate. - The medium-term baseline still falls short of the fiscal consolidation recommended by staff based on inter-generational equity considerations; the adjustment scenario is illustrative and additional consolidation would be necessary in an ideal policy setting. ### Sovereign risk and debt sustainability summary - Staff assessment: - The overall risk of sovereign stress is assessed as low, considering Saudi Arabia's large financial asset buffers. - Medium-term risks are assessed as low, despite mechanical signals of higher risks from some modules, because large financial asset buffers (sovereign assets exceeding 75 percent of GDP), institutional strength, and investor pool depth mitigate risks. - Long-term risks are assessed as low, given large financial asset buffers from the government and the PIF and limited impact of aging-related health and pension expenditures on debt dynamics. - DSA summary commentary: - Overall risk of sovereign stress is low and debt is assessed as sustainable, considering Saudi Arabia's large financial asset buffers, despite an increase in gross government debt. *Source: IMF staff calculations and analysis as presented in the content unit.* ### Annex VIII. Figure 2. Saudi Arabia: Debt Coverage and Disclosures ### Annex VIII. Figure 2. Saudi Arabia: Debt Coverage and Disclosures ### Debt coverage and subsectors included - Chosen coverage label: CGGGNFPS CPSOther (as shown). - 1a. If central government, are non-central government entities insignificant? 0 - Subsectors captured in the baseline (Inclusion): - 1 Budgetary central government: Yes - 2 Extra budgetary funds (EBFs): No - 3 Social security funds (SSFs): Yes - 4 State governments: Yes - 5 Local governments: Yes - 6 Public nonfinancial corporations: No - 7 Central bank: No - 8 Other public financial corporations: No - Commentary: "State and local governments in Saudi Arabia do not have their own separate debt issuance authority, and typically operate under the umbrella of the central government, including their borrowing requirements." ### Instrument coverage, accounting and consolidation notes - Basis of recording / Valuation of debt stock: Not applicable (as reported). - Reporting on Intra-Government Debt Holdings: Nonfin. pub. corp.; GG: expected; State govt.; Local govt.; CG; CPS; Debt securities. - Notes and definitions included in the figure: - 1/ CG=Central government; GG=General government; NFPS=Nonfinancial public sector; PS=Public sector. - 2/ Stock of arrears could be used as a proxy in the absence of accrual data on other accounts payable. - 3/ IPSGs = Insurance, Pension, and Standardized Guarantee Schemes, typically including government employee pension liabilities. - 4/ Includes accrual recording, commitment basis, due for payment, etc. - 5/ Nominal value definition provided. - 6/ Face value definition provided. - 7/ Market value definition provided. ### Coverage consolidation matrix (holders/issuers) - Matrix entries shown as zeros (0) for Budget. central govt, Extra-budget. funds, Social security funds, State govt., Local govt., Nonfin pub. corp., Central bank, Oth. pub. fin. corp. with Total rows indicating 000000 000 (as presented). - Commentary note: Total, Central bank, Oth. pub. fin corp, Budget. central govt, Extra-budget. funds, Social security funds, Loans, IPSGs (as labeled in the figure). ### Key disclosure points - "Not applicable" repeated for certain valuation/reporting entries. - The figure includes explicit mention that "Total" and sectoral headings are part of the reporting layout, with valuation and consolidation categories indicated but not populated beyond the not applicable / zero entries displayed. *Source: Annex VIII. Figure 2. Saudi Arabia: Debt Coverage and Disclosures (from provided IMF content).* ### Annex VIII. Figure 3. Saudi Arabia: Public Debt Structure Indicators ### Debt composition and notable observations - Perimeter shown: central government (repeated across charts). - Commentary: "Saudi Arabia continues to have space for external market access. The share of foreign currency debt slightly increases in the forecast horizon. Partial repurchasing of outstanding local and international debt bonds and securities maturing in the short term helped reduce future refinancing risk." - Residual maturity reported: 9.2 years (as shown). ### Illustrated indicators (percent of GDP and time series shown) - Debt by Currency (Percent of GDP): time series plotted across years including 2015, 2017, 2019, 2021, 2023, 2025, 2027, 2029, 2031, 2033 with categories: - Foreign currency - Local currency - Local-linked - Public Debt by Holder (Percent of GDP): categories include External private creditors, Domestic commercial banks, Projection shown. - Debt by Instruments (Percent of GDP): Marketable debt vs Nonmarketable debt. - Public Debt by Maturity (Percent of GDP): ≤ 1 year, 1-5 years, > 5 years with projection bars. - Public Debt by Governing Law, 2024 (percent): Domestic law, Foreign law ex. multilateral, Multilateral. *Source: Annex VIII. Figure 3. Saudi Arabia: Public Debt Structure Indicators (from provided IMF content).* ### Annex VIII. Figure 4. Saudi Arabia: Baseline Scenario — Key projections and contributors ### Public debt levels and changes (Percent of GDP) - Public debt: - Actual 2024: 26.2 - 2025: 29.8 - 2026: 32.6 - 2027: 34.9 - 2028: 37.0 - 2029: 38.8 - 2030: 40.6 - 2031: 42.4 - 2032: 44.3 - 2033: 46.3 - 2034: 48.3 - Change in public debt: - 2025: 3.7 - 2026: 2.7 - 2027: 2.3 - 2028: 2.1 - 2029: 1.8 - 2030: 1.8 - 2031: 1.8 - 2032: 1.9 - 2033: 2.0 - 2034: 2.0 ### Contributions of identified flows (Percent of GDP) - Contribution of identified flows (table row totals): - 2025: 3.3 - 2026: 2.5 - 2027: 2.3 - 2028: 2.1 - 2029: 1.8 - 2030: 1.7 - 2031: 1.8 - 2032: 1.8 - 2033: 1.9 - 2034: 1.9 - Primary deficit: - 2025: 2.4 - 2026: 3.7 - 2027: 3.5 - 2028: 3.1 - 2029: 2.7 - 2030: 2.3 - 2031: 2.2 - 2032: 2.2 - 2033: 2.2 - 2034: 2.2 - Noninterest revenues: - 2024: 26.2 - 2025: 23.2 - 2026: 23.1 - 2027: 23.0 - 2028: 22.8 - 2029: 22.5 - 2030: 22.1 - 2031: 22.1 - 2032: 22.1 - 2033: 22.1 - 2034: 22.1 - Noninterest expenditures: - 2024: 28.6 - 2025: 26.9 - 2026: 26.6 - 2027: 26.1 - 2028: 25.4 - 2029: 24.8 - 2030: 24.3 - 2031: 24.3 - 2032: 24.3 - 2033: 24.3 - 2034: 24.3 ### Automatic debt dynamics components - Automatic debt dynamics: - 2025: 0.6 - 2026: 0.5 - 2027: 0.0 - 2028: -0.1 - 2029: 0.0 - 2030: 0.1 - 2031: 0.2 - 2032: 0.2 - 2033: 0.3 - 2034: 0.4 - Real interest rate and relative inflation: - 2025: 0.8 - 2026: 1.4 - 2027: 1.1 - 2028: 1.0 - 2029: 1.1 - 2030: 1.2 - 2031: 1.4 - 2032: 1.5 - 2033: 1.7 - 2034: 1.8 - Real interest rate: - 2025: 1.0 - 2026: 1.8 - 2027: 1.3 - 2028: 1.1 - 2029: 1.1 - 2030: 1.3 - 2031: 1.5 - 2032: 1.6 - 2033: 1.7 - 2034: 1.9 - Relative inflation: - 2025: -0.2 - 2026: -0.4 - 2027: -0.2 - 2028: 0.0 - 2029: 0.0 - 2030: 0.0 - 2031: -0.1 - 2032: -0.1 - 2033: -0.1 - 2034: -0.1 - Real growth rate series (excerpt shows negative values in mid-projection rows): -0.4 -0.9 -1.1 -1.1 -1.1 -1.2 -1.2 a.-1.3 -1.4 -1.4 -1.5 (as presented). ### Other identified flows and residuals - Other identified flows: - 2025: -1.9 - 2026: -0.9 - 2027: -0.9 - 2028: -0.7 - 2029: -0.6 - 2030: -0.6 - 2031: -0.6 - 2032: -0.6 - 2033: -0.6 - 2034: -0.7 - Contingent liabilities: 0.0 across projection years listed. - (minus) Interest revenues: -0.9 across projection years listed. - Other transactions: - 2025: -1.0 - 2026: 0.0 - 2027: 0.0 - 2028: 0.2 - 2029: 0.4 - 2030: 0.4 - 2031: 0.3 - 2032: 0.3 - 2033: 0.3 - 2034: 0.3 - Contribution of residual: - 2025: 2.1 - 2026: 0.4 - 2027: 0.2 - 2028: 0.0 - 2029: 0.0 - 2030: 0.0 - 2031: 0.1 - 2032: 0.1 - 2033: 0.1 - 2034: 0.1 ### Gross financing needs and composition - Gross financing needs: - 2025: 4.2 - 2026: 5.9 - 2027: 5.1 - 2028: 5.4 - 2029: 4.9 - 2030: 4.9 - 2031: 4.9 - 2032: 5.2 - 2033: 5.5 - 2034: 9.8 - 2034 (last column shows 8.3 in table; both numbers appear in table layout) - Of which: debt service: - 2025: 2.7 - 2026: 3.0 - 2027: 2.6 - 2028: 3.2 - 2029: 3.1 - 2030: 3.5 - 2031: 3.7 - 2032: 3.9 - 2033: 4.3 - 2034: 4.7 - (Final reported figure in the row: 7.0) - Local currency component (gross financing needs row): - 2025: 2.2 - 2026: 1.9 - 2027: 1.5 - 2028: 1.6 - 2029: 1.5 - 2030: 1.8 - 2031: 2.0 - 2032: 2.3 - 2033: 2.6 - 2034: 3.0 - (an additional value 4.6 appears in table) - Foreign currency component: - 2025: 0.5 - 2026: 1.1 - 2027: 1.1 - 2028: 1.6 - 2029: 1.7 - 2030: 1.8 - 2031: 1.7 - 2032: 1.7 - 2033: 1.6 - 2034: 1.6 - (an additional value 2.5 appears in table) ### Memo and macro assumptions (selected) - Real GDP growth (percent): - 2024: 2.0 - 2025: 3.6 - 2026: 3.9 - 2027: 3.5 - 2028: 3.4 - 2029: 3.3 - 2030: 3.3 - 2031: 3.3 - 2032: 3.3 - 2033: 3.3 - Inflation (GDP deflator; percent): - 2024: -0.3 - 2025: -2.2 - 2026: 0.2 - 2027: 1.5 - 2028: 1.7 - 2029: 1.7 - 2030: 1.5 - 2031: 1.5 - 2032: 1.5 - 2033: 1.5 - Nominal GDP growth (percent): - 2024: 1.7 - 2025: 1.3 - 2026: 4.1 - 2027: 5.1 - 2028: 5.1 - 2029: 5.1 - 2030: 4.8 - 2031: 4.8 - 2032: 4.8 - 2033: 4.8 - Effective interest rate (percent): - 2024: 4.2 - 2025: 4.7 - 2026: 4.7 - 2027: 5.0 - 2028: 5.1 - 2029: 5.3 - 2030: 5.4 - 2031: 5.6 - 2032: 5.8 - 2033: 5.9 - 2034: 6.0 ### Commentary excerpts - "Gross central government debt is projected to increase moderately over time." - "'other flows' in mid-2010s include the use of government deposits at the central bank. 'Residual' in 2024 includes pre-financing." *Source: Annex VIII. Figure 4. Saudi Arabia: Baseline Scenario (from provided IMF content).* ### Annex VIII. Figure 5. Saudi Arabia: Realism of Baseline Assumptions ### Main assessment points - "The realism analysis does not point to major concerns and the projected debt reduction is well within norms." - "Projected fiscal adjustment reflects an improvement in the non-oil primary balance in percent of non-oil GDP, primarily due to the projected rationalization of wage bill and robust non-oil GDP growth." - Caveat: "The impact of fiscal adjustment on growth is only imperfectly apprehended in the context of an oil exporting economy, as the assessment should be more finely focused on non-oil growth." - Distributional and comparative indicators shown include percentile ranks for: - Public debt to GDP - Primary deficit - r - g (real interest rate minus real growth) - Exchange rate depreciation - 3-year debt reduction statistic referenced: "3-year reduction above 75th percentile (5.9 ppts of GDP)" and percentile rank "23.6" (as printed). - 3-year adjustment above 75th percentile (2 ppts of GDP) and percentile rank "89" (as printed). *Source: Annex VIII. Figure 5. Saudi Arabia: Realism of Baseline Assumptions (from provided IMF content).* ### Annex VIII. Figure 6. Saudi Arabia: Medium-Term Risk Assessment ### Quantitative indices and risk signals - Debt fanchart module: - Debt fanchart index (DFI): 3.3 - Debt fanchart contribution: 140.6 (percent of GDP); contribution 2.0 (percent of GDP) - Probability of debt non-stabilization (percent): 98.1 - Final fanchart (Percent of GDP): 19.7; contribution 0.4 - Gross Financing Needs (Percent of GDP) module: - Average baseline GFN (percent of GDP): 5.2; contribution 1.8 - Banking exposure indicators: - Initial Banks' claims on the gen. govt (pct bank assets): 18.2; contribution 5.9 - Change In banks' claims in stress (pct banks' assets): 11.5; contribution 3.9 - GFN financeability index (GFI): 11.5 - Risk signal labeling rules (as reported): - DFI signal: low risk if DFI < 1.13; high risk if DFI > 2.08; otherwise moderate. - GFI signal: low risk if GFI < 7.6; high risk if GFI > 17.9; otherwise moderate. - Another rule: low risk if GFI < 0.26; high risk if DFI > 0.40; otherwise moderate. - Final assessment: - Medium-term index (index number) indicates Risk signal: 5/ (final assessment line shows "High" then later commentary says Staff assesses medium-term risks as low). - Final assessment text: "Prob. of missed crisis, 2025-2030, if stress not predicted: 54.5 pct." - "Prob. of false alarms, 2025-2030, if stress predicted: 3.4 pct." ### Staff commentary and interpretation - Staff assesses medium-term risks as low, despite: - A mechanical signal of high risks from the debt fanchart module. - A mechanical signal of moderate risks from the GFN module. - Rationale: "Saudi Arabia's large financial asset buffers (with sovereign assets exceeding 75 percent of GDP) help mitigate medium-term sovereign risks." - Additional note: "A commodity price shock (lower commodity prices) would slightly increase public debt and GFNs in the medium term." - Source attribution in figure: "Source: IMF staff estimates and projections." *Source: Annex VIII. Figure 6. Saudi Arabia: Medium-Term Risk Assessment (from provided IMF content).* ### Annex IX. Bank Credit Growth and Liquidity Risk – Empirical Findings (2013–23 bank panel) ### Data and methodology - Annual panel data for commercial banks covering 2013–23. - Fixed-effects regressions with cluster-robust standard errors. - Data source: FitchConnect (publicly available bank-level balance sheet and income statement data), largest Saudi commercial banks with consistent reporting. - Caveat: Some variables, particularly liquidity ratios, are missing for some institutions and years; findings are indicative. ### Determinants of bank credit growth — core findings - Profitability: - Return on assets (ROA) is the most robust driver of credit growth. - ROA coefficients range from 1.4 to 1.9 and are statistically significant at the 1 percent level across specifications (table shows 1.437***, 1.931***, 1.844***, 1.917***, 1.817***, 1.817***). - Interpretation: More profitable banks expand lending more, likely due to stronger internal capital generation or market confidence. - Short-term funding: - Share of short-term funding is positively correlated with credit growth; statistically significant in the full model. - Example coefficients: 0.300*; 0.350** (table entries). - Interpretation: Reliance on short-term wholesale funding is associated with more aggressive lending growth and higher rollover risk. - Liquidity buffers: - Liquidity ratio (liquid assets to total assets) is negatively associated with loan growth. - Coefficients reported include -0.003**, -0.002*, and others (significant at the 5 to 10 percent level). - Interpretation: Banks with higher liquidity buffers exhibit lower loan growth, reflecting conservative liquidity management. - Credit quality: - NPL ratio is negatively associated with loan growth but statistical significance is marginal (e.g., -1.172, -1.307*, -1.274* in some specifications). - Fiscal dynamics: - Government expenditure growth has a strong positive link with bank lending. - A one percentage point increase in government expenditure growth is associated with a 0.4 percentage point rise in loan growth (0.406*** in Table 1, Column 8). - Non-significant drivers in this framework: - Government ownership (share of bank equity held by government-related entities) is not significantly associated with credit growth after controls. - Total capital ratio did not emerge as a statistically significant direct driver of credit growth in the regressions. ### Implications of credit growth for bank liquidity - Short-term liquidity (LCR): - Loan growth is positively and significantly associated with LCR growth. - A one percentage point increase in loan growth is associated with a 0.52 percentage point increase in the LCR (0.518*** in Table 1; described in text as 0.52). - Interpretation: May reflect temporary build-up in HQLA or central bank reserves during initial credit disbursement phases. - Structural liquidity (NSFR): - Loan growth impact on NSFR is negative and statistically significant (at the 10 percent level). - A one percentage point increase in loan growth is associated with a 0.05 percentage point decrease in NSFR growth (-0.051* in Table 1). - Interpretation: Stable funding sources are not expanding at the same pace as loan books, increasing medium-term structural liquidity risk. - Role of capital: - Tier 1 capital ratio is positively associated with growth in both the LCR and NSFR; statistically significant effect for NSFR (Tier 1 ratio coefficients: 0.013 and 0.004** in Table 1 columns for LCR and NSFR regressions). ### Quantitative table highlights (Annex IX. Table 1) - Observations: 150 (for regressions shown). - R-squared values across columns: 0.155, 0.186, 0.199, 0.212, 0.226, 0.245, 0.207, 0.358, 0.286, 0.197 (as tabulated). - Selected coefficient excerpts (standard errors omitted here but shown in table): - ROA: 1.437*** (column 1); 1.931*** (column 2); 1.844*** (column 3); 1.917*** (column 4); 1.817*** (columns 5–7). - Liquidity Ratio: -0.003** (column 2); -0.002* (column 3); -0.001 (other columns). - Short-Term Funding: 0.398 (column 3); 0.389 (column 4); 0.300* (column 5); 0.350** (column 6). - NPL ratio: -1.172 (column 6); -1.307* (column 7); -1.274* (column 8). - Gov Spending Growth: 0.406*** (column 8). - Loan Growth (in LCR regression): 0.518*** (column 9). - Loan Growth (in NSFR regression): -0.051* (column 10). - Tier 1 ratio: 0.013 (column 9); 0.004** (column 10). ### Policy-relevant implications and recommendations (drawn from analysis) - Monitor profitability-driven credit expansion: Given ROA’s strong association with loan growth, supervisory monitoring should account for profitability cycles that may accelerate lending. - Manage rollover and liquidity risks from short-term funding: - The positive link between short-term funding shares and loan growth implies higher rollover risk; encourage diversification toward more stable funding sources. - Strengthen structural funding to match loan book expansion: - The negative effect on NSFR indicates a need for policies that promote stable funding growth (e.g., term deposits, liability management strategies) to support long-term asset expansion. - Maintain capital buffers to support liquidity resilience: - The positive association of Tier 1 ratio with NSFR and LCR growth underscores the role of strong capitalization in preserving funding stability. - Continue supervisory attention as credit expands: - "To preserve financial stability and liquidity resilience, continued supervisory attention is crucial to ensure that credit expansion is adequately supported by a commensurate build-up in stable funding." *Source: Annex IX. Bank Credit Growth and Liquidity Risk – Evidence from Bank Level Panel Data (from provided IMF content).* ### Annex X. Status of Key FSAP Recommendations ### Annex X. Status of Key FSAP Recommendations ### Systemic Risk Analysis and Monitoring - Continue efforts to close G-20 DGI-2 data gaps, including on sectoral accounts; International Investment Position; and international banking statistics (DGI-2 recommendations 8–10). - Efforts are under way to close gaps in other areas, including with the involvement of STA TA. - Strengthen data collection and reinforce data sharing among agencies for the household and corporate sector; consider incorporating a structural “micro-to-macro approach” into the stress testing framework, particularly for credit risk modeling. - For corporate sector: SAMA has strengthened monitoring developments in non-financial corporations, via publicly listed companies. - For household sector: Work is underway to incorporate greater data on households via incorporating credit bureau data in SAMA’s Financial Stability surveillance activities, in addition to utilizing datapoints in DSTI data. - Establish a monitoring framework for the financial system’s exposures to large construction and infrastructure (e.g., mega/giga) projects. - The ongoing work under the NFSC would support a monitoring framework to large construction and infrastructure projects. - Incorporate contagion/interconnectedness analysis and micro data into the stress testing and risk monitoring frameworks; publish key results in the FSR. - Work is underway to develop a financial sector interconnectedness map through the NFSC, by developing financial sector accounts based on the IMF’s whom-to-whom templates. - Improve the scope and quality of publicly available data for real estate market, and real estate prices, and publish affordability indicators (e.g., price to income, price to rent ratios). - A new real estate price index was developed, and work is ongoing on constructing the affordability indicators. - Regularly collect and monitor household debt statistics (e.g., DSTI, debt-to-disposable income, debt to GDP) and monitor household characteristics and debt distribution. - SAMA and GASTAT are actively engaged in household data collection and monitoring. ### Macroprudential Policy - Consider establishing independent prudential supervision for NDF funds. - Under consideration - Implement a releasable capital buffer in the form of a positive neutral CCyB. - Done. - Re-evaluate the DSTI and LTV limits. - A review of the DSTI limits is under way ### Financial Supervision and Regulation—BCP Assessment - Amend the BCL and SCBL reflecting FSAP advice (e.g., SAMA independence and accountability; legal protection for SAMA staff, former staff, and agents’; SAMA’s powers to conduct effective banking supervision). - This recommendation was taken into consideration while preparing the draft Banking Law by including articles in the draft law relating to SAMA independence, legal protection, and SAMA’s powers to conduct effective banking supervision. The draft banking law has been submitted to the legislative body. - Revise prudential regulations, and supervisory approach, techniques, tools, and reporting to address observed gaps, and to effectively conduct regulation and supervision at the levels of the solo bank, the consolidated bank, and each bank within groups. - SAMA is undergoing a review of the current risk-based supervision framework, which aims to enhance the supervisory practices and address relevant FSAP recommendations. SAMA has completed the first phase of this exercise which included a complete assessment of the current Risk-Based Supervision policy procedures and data templates. SAMA has commenced the second phase of the project, which will involve updating data templates, upgrading internal systems to align with the revised framework, and implementing the updated supervisory cycle. - Establish or revise supervision policy, manuals, and procedures to make comprehensive the process of licensing and other applications from banks seeking SAMA approval, and to ensure that supervisors engage bilaterally and more actively with banks’ board members, external auditors, and other relevant domestic and foreign regulators, supervisors, and resolution authorities. - SAMA is in the process of developing internal licensing guidelines in order to ensure the timely and comprehensive processing of licensing applications and to address the FSSA recommendations. Also, SAMA is undergoing a review of the current risk-based supervision framework, which aims to enhance the supervisory practices and address relevant FSAP recommendations (see above). ### Financial Regulation and Supervision—CPIFR Assessment - Ensure effective implementation of recently issued regulations from the perspectives of both SAMA and Islamic banks. - As mentioned above, the current review of the risk-based supervision framework takes into account how the implementation of the current rules and regulations (including the shariah-related regulation) is monitored, and also considers flexibility for future amendments to the current quantitative and qualitative indicators to reflect any regulatory changes issued by SAMA or Basel Committee. - Implement guidance for managing liquidity risk separately for Islamic Windows. - Under assessment - Enhance Pillar 3 disclosures by implementing IFSB-22 for Islamic banking and Islamic Windows. - No action ### Financial Safety Nets and Crisis Management - Amend the Law on SIFIs reflecting FSAP advice (e.g., scope, triggers, resolvability); establish a bank-specific liquidation framework and a legal framework for deposit insurance. - SAMA is finalizing the draft implementing regulation of the SIFI Law in coordination with the legislative authority, which may address recommendations on the resolution framework. As a result, amendments to the SIFI Law may not be necessary. - As for the bank-specific liquidation framework, SAMA is of the view that the existing Bankruptcy Law and its implementing regulations can be applied to banks. The Law grants SAMA the authority to issue supplementary regulations that may either exempt supervised entities (including banks) from specific provisions or introduce new ones. This flexibility enables SAMA to tailor the general bankruptcy framework to better suit the needs of banks and other supervised financial institutions, if necessary. - As it pertains to the deposit insurance framework, the framework for the DPF is based on the regulation issued in 2015. However, in the new draft banking law there is a specific chapter that governs the DPF. Following the issuance of the law, SAMA plans to issue an Implementing regulation specific to the DPF, with details aligned with IADI core principles. - Finalize and enact implementing regulations, reflecting FSAP advice (including to allow for ex-post designation of SIFIs). - As noted, SAMA is finalizing the draft implementing regulation of the SIFI Law in coordination with the legislative authority. SAMA is analyzing the FSAP recommendations and will reflect what needs to be incorporated. - Ensure adequate resources and independence of SAMA’s resolution function. - A dedicated function within SAMA was established in 2023, and staff is being recruited. A decision was made regarding the future reporting line for the resolution function to ensure independence. The change will be made once current efforts linked with setting up and operationalizing the function are completed, which is expected during 2026. ### Systemic Liquidity Management and Emergency Liquidity Assistance - Continue to strengthen liquidity management and forecasting framework. - Progress achieved in liquidity forecasting by concluding a data-sharing agreement between SAMA and the Ministry of Finance. - Enhance the collateral framework by introducing maturity-based haircuts (I); gradually transitioning to market valuation (ST); considering making high-quality private debt securities eligible for OMO in crisis times (MT). - Work on reviewing the collateral framework has just started - Adopt, and publish an ELA regulation outlining all requirements and parameters of ELA and prepare internal ELA procedures. - The ELA regulation was drafted and is expected to be adopted at a later stage - Operationalize the ELA framework through regular ELA simulations and collateral mobilization testing and pre-positioning and adopt an MoU between SAMA and MoF on the use of government guarantees. - The ELA framework is expected to be operationalized immediately after the adoption of the ELA regulation. ### Financial Integrity - Conduct thematic inspections of key AML/CFT requirements and levy sanctions in case of non-compliance. - The first thematic AML/CFT inspection has taken place in H1 2025. ### Role of State, Long-Term, Green and MSME Finance, Payments, and Digital Financial Services - NDF to expand its performance monitoring framework; ringfence funds performing quasi-government functions. - A review of performance monitoring framework is under way as part of the initiative to obtain a credit rating by 2027. - Develop a market for qualified professional investors and allow unrestricted trading of private-placement bonds in the market. - No action - Review the current MSME definitions; and regularly collect and publish MSME financing data using standard definitions with relevant breakdowns (e.g., firm size, funding source, women-owned enterprises). - No action - Update and publish the Oversight Framework document for Payments and Digital Financial Services. - In progress - Conduct a climate risk assessment to inform evidence-based supervisory approach; publish the results to raise awareness. - No action *Source: Annex X. Status of Key FSAP Recommendations (as of May 2025).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1sauea2025001-source-pdf.pdf_