IMF Staff Country Reports

Saudi Arabia: Selected Issues

August 24, 2018

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Saudi Arabia: Selected Issues, (USA: International Monetary Fund, 2018) accessed November 5, 2024

Also available in: العربية

Summary

This Selected Issues paper suggests that while the government should continue to work on clearly defining its fiscal policy objectives, at this stage the focus of reforms should be to continue to strengthen the fiscal framework rather than on introducing a formal fiscal rule. A fiscal rule is only as good as the institutions that support it. Moreover, resource rich countries’ experiences with fiscal rules have been mixed as it has proven difficult to formulate rules which are simple, flexible, and robust that can withstand large commodity prices swings. One key question before the government is to define its long-term fiscal policy objectives beyond 2023. This will help determine how it may want to anchor fiscal policy. While a target for the overall balance, as announced in the Fiscal Balance Program, is a reasonable objective for the next 5 years, such a target may not deliver the longer-term fiscal goals of the government. It is also subject to swings in oil prices—it may not be achievable if oil prices decline significantly, but if oil prices were to increase substantially, the target could be achieved even if spending were to increase to such a level that increases future fiscal vulnerabilities. Therefore, it would be better to formulate fiscal policy objectives in terms of the primary non-oil balance rather than the overall balance.

Subject: Budget planning and preparation, Expenditure, Fiscal policy, Fiscal rules, Oil prices, Prices, Public financial management (PFM)

Keywords: Budget planning and preparation, CR, Employment quota, Expatriate worker, Firm, Fiscal rules, Global, ISCR, Oil price, Oil prices, Price, Private equity, Revenue, Venture capital, Worker

Publication Details

  • Pages:

    64

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

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  • Series:

    Country Report No. 2018/264

  • Stock No:

    1SAUEA2018002

  • ISBN:

    9781484374382

  • ISSN:

    1934-7685