## IMF Executive Board Concludes 2025 Article IV Consultation with Saudi Arabia

_IMF News, August 4, 2025_

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## Bibliographic details
- Published: August 4, 2025

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### 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.*

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## References

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_Source: https://www.imf.org/en/news/articles/2025/08/03/pr25275-saudi-arabia-imf-executive-board-concludes-2025-article-iv-consultation_