Saudi budget: 2018 to be ‘litmus test’ for economy

Accounting and consulting firm KPMG released the details of a survey of top executives in the Kingdom, in which it was revealed that 70 percent thought that economic growth would be between 2 and 5 percent over the next three years. (Reuters)
Updated 20 December 2017
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Saudi budget: 2018 to be ‘litmus test’ for economy

DUBAI: Next year will be “a litmus test for private-sector engagement in the Saudi Arabian economy,” a leading regional economist said in reaction to the Kingdom’s budget announced in Riyadh on Tuesday.
Nasser Saidi, the former chief economist of the Dubai International Financial Centre and Lebanese economy minister, told Arab News, “Much hinges on providing the stimulus and incentives to the SME (small and medium enterprises) sector and women’s greater participation in the labor force.”
He added that the 2018 budget comes at a crucial time in the Kingdom’s economic history: “We see public-private partnerships in infrastructure and development projects, including in public utilities services and social capital sectors such as health and education, as well as the anticipated privatization of state enterprises and the mother of all privatizations, Aramco.”
Jason Tuvey, Middle East economist at London-based consultancy Capital Economics, said the budget — which forecasts the biggest-ever expenditure in the Kingdom’s history — amounted to a “modest” loosening of fiscal policy in 2018.
“The effect of the introduction of the Citizens Account (a plan to compensate the less well-off for the forecast higher cost of living) and the recent SR72 billion ($19.2 billion) private-sector stimulus will be partly offset by the introduction of VAT (value-added tax, set to be introduced in 2018), other fees and levies, and subsidy removal.
“But I should stress that it is just a relatively modest loosening and actually rather less than the loosening this year, as measured by the non-oil budget balance, which we think is the best way to measure it,” he added.
Saidi said the big expenditure was in part enabled by the improvement in oil revenues in the second half of 2017. “The Saudi 2018 budget reflects the modest recovery of oil prices during the latter half of 2017, which resulted in a lower budget deficit than expected, and the start of the implementation of the National Transformation Plan (NTP) 2.0 on a conservative estimate of oil prices in 2018.”
He said: “The services sectors, including tourism and hospitality, and their support infrastructure of transport and logistics (ports, airports and their services) represent low-hanging fruit.”
Tuvey noted that the budget statement had confirmed that the date for achieving a balanced budget is 2023, rather than 2020 as had previously been suggested.
“That is fair enough because policymakers have undertaken a lot of austerity over the past couple of years and the IMF said that they could afford to take longer over it. But that also means there will have to be more austerity over the next few years, in the absence of any great rise in the price of oil,” Tuvey said.
He said that there had appeared to be a big ramp-up in spending in the Kingdom in the final quarter of 2017.
Accounting and consulting firm KPMG released the details of a survey of top executives in the Kingdom, in which it was revealed that 70 percent thought that growth would be between 2 and 5 percent over the next three years.


World applauds as Saudi women take the wheel

A Saudi woman and her friends celebrate her first time driving on a main street of Alkhobar city in eastern Saudi Arabia on her way to Bahrain on June 24, 2018. (AFP / HUSSAIN RADWAN)
Updated 25 June 2018
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World applauds as Saudi women take the wheel

  • As the de facto ban on women driving ended after more than 60 years, women across the Kingdom flooded social media with videos of their first car trips
  • The celebrations even reached as far as France, where Aseel Al-Hamad, the first female member of the Saudi national motorsport federation, drove a Formula 1 racing car in a special parade before the French Grand Prix at Le Castellet 

JEDDAH: The world awoke on Sunday to images and video footage many thought they would never see — newly empowered Saudi women taking the wheel and driving their cars.

As the de facto ban on women driving ended after more than 60 years, women across the Kingdom flooded social media with videos of their first car trips, while some police officers among the large number out on the streets distributed roses to the first-time drivers.

The celebrations even reached as far as France, where Aseel Al-Hamad, the first female member of the Saudi national motorsport federation, drove a Formula 1 racing car in a special parade before the French Grand Prix at Le Castellet.

“I hope doing so on the day when women can drive on the roads in the Kingdom of Saudi Arabia shows what you can do if you have the passion and the spirit to dream,” she said.

In a tribute to Saudi female drivers, the Lebanese soprano Hiba Tawaji released a special video of a song she performed live in Riyadh at a concert last December “Today women in Saudi Arabia can legally drive their cars,” she said. “Congratulations on this achievement, this one’s for you!”

Back home in Saudi Arabia, the atmosphere was euphoric. “It’s a beautiful day,” businesswoman Samah Algosaibi said as she cruised around the city of Alkhobar. 

“Today we are here,” she said from the driver’s seat. “Yesterday we sat there,” she said, pointing to the back.

“I feel proud, I feel dignified and I feel liberated,” said Saudi Shoura Council member Lina Almaeena, one of the first women to drive in the Kingdom.

She told Arab News that the event was changing her life by “facilitating it, making it more comfortable, making it more pleasant, and making it more stress-free.”

Almaeena urged all drivers to follow the traffic and road safety rules. “What’s making me anxious is the misconduct of a lot of the drivers, the male drivers. Unfortunately they’re not as disciplined as they should be. Simple things such as changing lanes and using your signals — this is making me anxious.

“But I’m confident: I’ve driven all around the world when I travel, especially when I’m familiar with the area. It’s really mainly how to be a defensive driver because you have to be.”