Saudi budget deficit halves as financial reforms kick in

Saudi Finance Minister Mohammed Al-Jadaan shows documents during a press conference to unveil the country’s national budget for 2017 on December 22, 2016 in Riyadh. (AFP)
Updated 14 August 2017
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Saudi budget deficit halves as financial reforms kick in

LONDON: Saudi Arabia’s budget deficit halved in the first six months of the year following sweeping spending cuts that form part of an ambitious economic reform plan.
The deficit shrank by 51 percent to SR72.73 billion ($19.38 billion) which officials said reflected progress made in improving state finances, which were hit by the dramatic decline in oil prices from mid-2014.
“The second quarterly report shows the effectiveness of economic reforms and measures in the National Transformation Program within the Kingdom’s Vision 2030,” said Finance Minister Mohammed Al-Jadaan.
“Although the economic challenges are still existing, we are confident that we can meet our expectations for the fiscal deficit for 2017.”
Saudi Arabia has slashed government spending, rolled back subsidies and ushered in a slew of other economic reforms under Saudi Vision 2030, a plan driven by Crown Prince Mohammed bin Salman, deputy premier and minister of defense.
The plan aims to cut the Kingdom’s reliance on oil and gas by investing heavily in sectors that create economically productive jobs from finance to manufacturing.
As part of a drive to boost revenues, the government will also introduce value-added tax (VAT) next year along with its Gulf Cooperation Council (GCC) oil-exporting neighbors, which are also responding to weaker hydrocarbon prices.
Saudi Arabia’s Ministry of Finance said total revenues in the first half rose to SR307.98 billion, a 29 percent increase on the same period last year. Spending fell 2 percent compared to the same period a year earlier to SR380.71 billion, according to a statement published by the Saudi Press Agency (SPA).
Revenues for the second quarter rose 6 percent to SR163.91 billion.
About SR100.9 billion of that came from oil – a 28 percent increase on the same quarter a year ago, due to recovering prices.
Mazen Al-Sudairi, the head of research at Al-Rajhi Capital said in a note to clients that compared to other commodity-based economies, Saudi Arabia debt levels remained “very healthy.”
Al-Rajhi Capital estimates that oil would need to trade at an average of $61 per barrel in the second half of this year for the government to meet its full-year oil-revenue target.
Brent crude fell by about 0.6 percent last week to close at $52.10 per barrel.
The International Monetary Fund (IMF) last month welcomed the economic reforms introduced by the Saudi government including the planned rollout of VAT, removing obstacles to private growth and boosting bank regulation.
The IMF also cautioned that the government should closely monitor the pace of fiscal reforms and make adjustments where necessary.
“Fiscal consolidation efforts are beginning to bear fruit, progress with reforms to improve the business environment are gaining momentum, and a framework to increase the transparency and accountability of government is largely in place,” the IMF said in a summary. “Effective prioritization, sequencing, and coordination of the reforms is essential, and they need to be well-communicated and equitable to gain social buy-in and ensure their success.”

John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh, said that the recovery in oil prices this year had been a key factor behind the reduced deficit.
“Higher budgetary revenues and a narrower deficit is clearly the result of a jump in oil revenues during the second quarter,” he told Arab News.
“The decline in non-oil revenues is the result of slower economic activity, which could show signs of recovery in the second half of the year.”


Saudi Arabia’s crown prince orders restoration and renovation of 130 historical mosques

Updated 3 min 50 sec ago
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Saudi Arabia’s crown prince orders restoration and renovation of 130 historical mosques

JEDDAH: Crown Prince Mohammed bin Salman has ordered the restoration of 130 historical mosques within the National Program for the Restoration of Historic Mosques supervised by the Saudi Commission for Tourism and National Heritage (SCTNH) in partnership with the Ministry of Islamic Affairs, Call and Guidance.
The support he provided to develop historical mosques covered in the first phase the restoration of 30 mosques in 10 regions, at a cost of more than SR50 million ($13 million).
The National Program for the Restoration of Historic Mosques is one of the programs adopted by Prince Sultan bin Salman, president of SCTH and founder of Al-Turath Charitable Foundation, as part of his concern to take care of and serve mosques and the Islamic architectural heritage. The foundation has undertaken to document and restore a number of mosques of historical value since its launching of the program in 1998.
The program has received the support of the country’s leaders, businessmen benefactors and the regions’ governors. King Salman sponsored the launching of the program to restore and renovate historical mosques in Ad Diriyah and Jeddah, and donated the renovation costs of Al-Hanafi mosque in Jeddah.
Crown Prince Mohammed bin Salman’s support for the historical mosques comes from his belief in their importance in the Islamic religion and architectural heritage along with the historical, social and cultural richness they represent.
The crown prince’s support is considered the most generous in the Kingdom’s history, given the number of mosques and the overall cost since the launching of the program 20 years ago. The support is in coordination and partnership with SCTNH’s National Program for the Restoration of Historic Mosques, which was launched by the Al-Turath Charitable Foundation before it became a joint program with the SCTH and the Ministry of Islamic Affairs, Call and Guidance, three years ago.
The crown prince’s project for the development of historical mosques will reinforce concern to develop the Kingdom’s historical and heritage regions and restore the mosques to receive worshippers again after they have been abandoned in previous years. The Kingdom has witnessed a rapid architectural growth and thus has neglected most of the old and historical mosques and destroyed some others, which are bein replaced by new mosques. The program will take care of these neglected mosques.
Work teams have started formulating the project action plan under the directions of the crown prince. The first phase covers 30 mosques that will be restored: Each mosque will be ready to receive more than 4,000 worshippers.
The crown prince’s support for this program is among many other contributions to societal and human projects, including the SR100 million donation for charitable associations and his support for the release of prisoners with SR19 million.