Finance minister’s pre-budget statement paints rosy picture of Saudi economy

Finance minister’s pre-budget statement paints rosy picture of Saudi economy
Finance Minister Mohammed Al-Jadaan speaking to media in Riyadh. (AN photo by Ahmed Fathi)
Updated 01 November 2019

Finance minister’s pre-budget statement paints rosy picture of Saudi economy

Finance minister’s pre-budget statement paints rosy picture of Saudi economy
  • Efforts to develop and grow role of private sector in Kingdom continue to pay off

RIYADH: Saudi Finance Minister Mohammed Al-Jadaan on Thursday said government expenditure is expected to be SR 1,020 billion in 2020. Efforts will be made to improve the efficiency of spending without any disruption to diversification and transformation plans, he added. Revenues are projected to be about SR 833 billion in 2020, with a budget deficit of about 6.5 percent of GDP.

The figures were revealed in the minister’s pre-budget statement for fiscal year 2020. It gave details of developments in public-finance performance during 2019, and set out the main fiscal objectives and economic estimates for 2020 and the medium-term future. It also highlighted the key initiatives and programs that will be implemented during the coming fiscal year within the framework of Saudi Vision 2030.

Al-Jadaan said that the Kingdom’s fiscal policy aims to strike a balance between maintaining fiscal sustainability and enhancing economic growth and development, while also supporting economic transformation in line with Vision 2030. It does this by striving to increase efficiency and effectiveness within the framework of fiscal discipline, improving the basic services provided to citizens, diversifying government revenue sources and empowering the private sector.

The cabinet's approval of the government’s Tenders and Procurement Law will ensure fairness and transparency, promote competition, prevent the influence of personal interests, protect public money and provide fair treatment to competitors, he added, which will help to ensure equal opportunities.

The minister also said that the preliminary economic results and indicators reflect significant progress in the past year. Real GDP achieved a positive growth rate of about 1.1 percent in the first half of 2019, helped by the growth of the non-oil sector by 2.5 percent in the same period. Initial estimates indicate that GDP is expected to grow by 0.9 percent in 2019, with non-oil GDP growth rates expected to accelerate. Performance is expected to continue to improve in 2020, with GDP growth projected to reach 2.3 percent.

Total expenditure in 2019 is expected to be SR 1,048 billion, Al-Jadaan said, as the government aims to achieve fiscal discipline and stability as key objectives for sustainable economic growth in the medium term. Revenues for fiscal year 2019 are expected to be SR 917 billion, representing 1.2 percent growth compared with 2018, he added. The ratio of non-oil revenues to non-oil GDP is expected to increase to 16 percent by the end of 2019, compared with 7 percent in 2012.

“The budget deficit is expected to continue to decrease in this fiscal year 2019, reaching 4.7 percent of GDP, compared with 5.9 percent last year,” said Al-Jadaan.

He added that the 2020 budget will continue to implement programs and initiatives designed to strengthen the role of the private sector in the economy as the main driver of economic growth and job creation. Currently, there are 22 support initiatives for the private sector, including cash subsidies, commitments and financing guarantees, offered by entities such as the Ministry of Finance, the Ministry of Housing and the General Investment Authority.

Al-Jadaan said that the 2020 budget will continue efforts to improve the efficiency of public-finance management to maintain fiscal sustainability and maximize return on expenditure. This takes into account the potential effect of domestic and international developments during budget execution, he added.

“The 2020 budget will also focus its expenditure on Vision 2030 realization programs, which represent the main tool to realize economic transformation objectives, including housing programs, the quality of life program, privatization program, mega projects, private-sector stimulus packages and other major projects across various sectors,” the minister said. These projects will help to support non-oil GDP growth in 2020 and over the medium term, he added.

The implementation of these programs and initiatives has led to performance improvement in a number of sectors, Al-Jadaan said, the most notable of which is construction. It returned to positive growth in 2019 after declining during the previous three years.

In general, the economy has resumed positive and high growth across a number of economic sectors.

“In the first half of 2019, wholesale, retail-trade, restaurants and hotels, and finance, insurance, and real-estate activities grew by 3.8 percent and 5.1 percent respectively compared with the same period last year,” said the minister.

Transport, storage and communication, and community, social and personal services activities, including arts and entertainment, increased by 5.6 percent and 5.9 percent respectively compared with the same period in 2018.

The government is continuing its efforts to develop local content, enhance the competitiveness of the economy and improve the business environment, said Al-Jadaan. He noted that the non-oil private sector experienced positive growth during the first half of 2019 for the first time in three years, supported by policies designed to stimulate the private sector.

He said that releasing a pre-budget statement for a second consecutive year highlights the government commitment to reinforcing governance and controls on public finance, while enhancing the policy of financial disclosure by strengthening transparency principles.

With this in mind, the Kingdom recently joined the International Monetary Fund’s Special Data Dissemination Standard, which is considered one of the best international standards in the dissemination of national fiscal and economic data.

“This is an important step on the Kingdom's path to enhancing fiscal disclosure and transparency in accordance with international standards,” said Al-Jadaan.
 


Musk to offer $100m prize for ‘best’ carbon capture tech

Musk to offer $100m prize for ‘best’ carbon capture tech
CEO of Tesla Motors Elon Musk reacts following the company's initial public offering at the NASDAQ market in New York June 29, 2010. (REUTERS)
Updated 23 January 2021

Musk to offer $100m prize for ‘best’ carbon capture tech

Musk to offer $100m prize for ‘best’ carbon capture tech
  • Tesla is also gearing up for an India launch but the US electric carmaker is likely to remain a niche player for years, catering only to the rich and affluent in the world’s second-most populous nation

NEW YORK: Tesla chief and billionaire entrepreneur Elon Musk took to Twitter to promise a $100 million prize for development of the “best” technology to capture carbon dioxide emissions.
Capturing planet-warming emissions is becoming a critical part of many plans to keep climate change in check, but very little progress has been made on the technology to date, with efforts focused on cutting emissions rather than taking carbon out of the air.
The International Energy Agency said late last year that a sharp rise in the deployment of carbon capture technology was needed if countries are to meet net-zero emissions targets.
“Am donating $100m toward a prize for best carbon capture technology,” Musk wrote in a tweet, followed by a second tweet that promised “Details next week.”
Tesla officials did not immediately respond to a request for additional information.
Musk, who co-founded and sold internet payments company PayPal Holdings, now leads some of the most futuristic companies in the world.
Besides Tesla, he heads rocket company SpaceX and Neuralink, a startup that is developing ultra-high bandwidth brain-machine interfaces to connect the human brain to computers.
Newly sworn-in US President Joe Biden has pledged to accelerate the development of carbon capture technology as part of his sweeping plan to tackle climate change.
On Thursday, he named Jennifer Wilcox, an expert in carbon removal technologies, as the principal deputy assistant secretary for fossil energy at the US Department of Energy.
Tesla is also gearing up for an India launch but the US electric carmaker is likely to remain a niche player for years, catering only to the rich and affluent in the world’s second-most populous nation.
India’s fledgling electric vehicle (EV) market accounted for only 5,000 out of a total 2.4 million cars sold in the country last year. A lack of local production of components and batteries, negligible charging infrastructure and the high cost of EVs mean there have been few takers in the price-conscious market.
It’s also difficult to see how Tesla’s sought-after and expensive autonomous driving features will work on India’s congested roads.
Ammar Master, a forecaster at consultancy LMC Automotive, said he expects Tesla to annually sell only 50-100 of its Model 3 electric sedans in India, at least in the first five years.
“As a country, India is still not so environmentally conscious to pay that much of a premium,” Master said.
“It always comes down to the price point. There will be some high-net-worth individuals like movie stars and top business executives who will look at it for the brand value. But then, how many buyers are there?”
The automobile manufacturer registered a local company in India earlier this month, a step toward its entry in the country, expected to be as early as mid-2021.
Tesla plans to import and sell the Model 3 in India for around $65,000-$75,000 — roughly double the price in the US market, sources familiar with the plans said.
This means it will compete in India’s even smaller luxury EV segment that has recently started seeing interest from the likes of Jaguar Land Rover (JLR) and Daimler’s Mercedes Benz.
The Mercedes Benz EQC, India’s first luxury EV launched in October for $136,000, and has since sold 31 units, according to auto researcher JATO Dynamics. British luxury carmarker JLR, owned by India’s Tata Motors, plans to launch its I-PACE EV before March. It sells in the US for around $70,000.
Although India’s road infrastructure has improved in recent years, traffic discipline — like lane driving — is still rudimentary. Auto analysts say that means many of Tesla’s features like the automatic lane changing function will be tough to deploy on crowded Indian streets.
Stray animals, including cattle, and potholes on the road are a further problem.
“Most of Tesla’s high technology features will be redundant and users will not get the bang for the buck despite paying premium prices,” said Ravi Bhatia, president for India at JATO Dynamics.
Rohan Patel, a senior public policy executive at Tesla in the US, is among those leading efforts around its India launch, the sources familiar with the plans said. The EV giant is looking to hire 15-20 people mainly for sales and marketing, one source said.
Tesla and Patel did not respond to a request for comment.