IMF Executive Board Concludes 2025 Article IV Consultation with Saudi Arabia

IMF News, August 4, 2025

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• Published: August 4, 2025

Recent economic performance

• Non-oil real GDP grew by 4.5 percent in 2024, driven by retail, hospitality, and construction.
• Oil output was held at 9 mbpd in 2024 due to OPEC+ production cuts, causing a 4.4 percent decline in oil GDP.
• Overall real GDP growth moderated to 2.0 percent in 2024.
• Inflation remained contained in 2024, with housing rent increases continuing to decelerate.
• Unemployment among Saudi nationals hit a record low in 2024; youth and female unemployment rates were halved over four years.
• The current account shifted to a 0.5% of GDP deficit in 2024 from a 2.9 percent of GDP surplus in 2023, increasingly financed by external borrowing and reduced foreign asset accumulation.
• Saudi Central Bank’s net foreign assets stabilized at $415 billion, covering 187 percent of the IMF’s reserve adequacy metric.
• The banking sector remained strong in 2024, with high capitalization, profitability, and nonperforming loans at their lowest since 2016.

Outlook and risks

• Near- and medium-term growth:
  • Non-oil growth is expected to remain above 3.5 percent over the medium term, supported by robust domestic demand, government-led projects, Vision 2030 implementation, and major international events.
  • Overall real GDP is projected to accelerate to 3.9 percent by 2026, supported by the continued phase-out of OPEC+ production cuts.
• Inflation and external account:
  • Inflation is expected to remain contained.
  • The current account deficit is projected to persist over the medium term due to increased investment-linked imports and remittance outflows.
  • Reserve buffers will remain appropriate, with the current account deficit financed through deposit drawdowns, less FX asset accumulation abroad, and higher external borrowing.
• Downside risks:
  • Weaker oil demand due to global trade tensions.
  • Lower government spending.
  • Regional security risks that could dampen investor sentiment.
• Upside scenarios:
  • Higher oil production or additional investments linked to Vision 2030 initiatives.
  • Higher oil prices if the global recovery strengthens or in case of disruptions to global oil supply.

Executive Board assessment and policy recommendations

• Directors commended Saudi Arabia’s strong economic performance, robust non‑oil activity, low inflation, and record‑low unemployment, noting ongoing Vision 2030 reforms.
• Fiscal policy:
  • Supported a countercyclical fiscal policy in the near term, given ample fiscal buffers, to support growth and avoid magnifying the impact of large oil price fluctuations.
  • Encouraged contingency planning and careful consideration of trade‑offs in the use of fiscal buffers.
  • Over the medium term, agreed that a gradual fiscal consolidation is needed to achieve intergenerational equity.
  • Suggested measures to achieve consolidation: broader tax policy reforms to increase non‑oil revenue, wage bill containment, energy subsidy reform alongside better targeting social safety nets, and streamlining of non‑essential expenditures.
  • Commended progress in strengthening fiscal institutions and encouraged: enhancement of the medium‑term fiscal framework, operationalization of an expenditure‑based fiscal rule, improvements in budget execution, and operationalization of a comprehensive sovereign asset‑liability management framework.
  • Welcomed improved fiscal transparency, enhanced fiscal analysis and data disclosure, ongoing risk analysis (including contingent liabilities), and noted tightening sovereign spreads following recent bond issuance.
• Monetary and exchange rate policy:
  • Agreed that the currency peg to the U.S. dollar remains appropriate.
  • Welcomed improvements in the liquidity management framework and noted that monetary operations should focus on smoothing short‑term liquidity without fueling asset and credit growth.
• Financial sector and stability:
  • Noted the banking system is well‑capitalized and profitable, with adequate liquidity and low systemic vulnerabilities.
  • Welcomed progress in banking regulatory and supervisory reforms; encouraged swift adoption of the Banking Law and finalization of the crisis management framework.
  • Commended progress in implementing FSAP recommendations and SAMA’s vigilance; welcomed the proactive review of macroprudential tools including the recent introduction of a 100 basis points countercyclical capital buffer.
  • Supported continued deepening of the domestic capital market to diversify funding sources.
• Structural reforms:
  • Commended impressive structural reforms since 2016 and stressed the importance of sustaining reform momentum irrespective of oil price developments.
  • Welcomed improvements in the regulatory and business environment, human capital, female labor participation, and governance.
  • Encouraged sustained improvement in SME access to finance, regional trade integration, and climate resilience.
  • Recommended that industrial policies be complementary to structural reforms: targeted, temporary, transparent, and prioritizing crowding in private sector investment and advancing economic diversification.
• External and multilateral role:
  • Commended Saudi Arabia for its stabilization role in the region and leadership in multilateral fora, including G20 and as Chair of the IMFC.

Key statistics and projections (selected)

• Population: 35.3 million (2024)
• Quota: SDR 9,992.6 million (2.10% of total)
• Main products and exports: Oil and oil products (77%)
• Key export markets: Asia, U.S., and Europe

• Output
  • Real GDP growth: 2024: 2.0, 2025: 3.6, 2026: 3.9
  • Non-oil GDP growth: 2024: 4.5, 2025: 3.4, 2026: 3.5

• Prices
  • CPI Inflation (avg, %): 2024: 1.7, 2025: 2.1

• Central government finances (% GDP)
  • Revenue: 2024: 27.1, 2025: 24.1, 2026: 24.0
  • Expenditure: 2024: 29.6, 2025: 28.1, 2026: 27.9
  • Fiscal balance: 2024: -2.5, 2025: -4.0, 2026: -3.9
  • Public debt: 2024: 26.2, 2025: 29.8, 2026: 32.6
  • Non-exported oil primary balance (% Nonoil GDP): 2024: -24.7, 2025: -21.1, 2026: -20.3

• Money and credit
  • Broad money (% change): 2024: 8.8, 2025: 9.3, 2026: 8.2
  • Credit to the private sector (% change): 2024: 13.4, 2025: 12.4, 2026: 8.9

• Balance of payments
  • Current account (% GDP): 2024: -0.5, 2025: -2.6, 2026: -3.0
  • FDI (% GDP): 2024: 1.6
  • Reserves (months imports)1: 2024: 14.9, 2025: 14.1, 2026: 13.3
  • External debt (% GDP): 2024: 30.1, 2025: 34.8, 2026: 38.1

• Exchange rate
  • REER (% change)2: 2024: 2.4, 2025: 3.0

• Unemployment rate
  • Overall (% total labor force): 2024: 7.4
  • Nationals (% total labor force): (data point listed)

Sources: Country authorities and IMF staff estimates and projections.

IMF Executive Board Concludes 2025 Article IV Consultation with Saudi Arabia (Press Release No. 25/275), August 4, 2025.

References

• Saudi Arabia and the IMF
• IMF Policy Advice -- A Factsheet
• Press Releases
• PRESS CENTER
• http://www.IMF.org/external/np/sec/misc/qualifiers.htm
• https://www.imf.org/en/home