The four big takeaways of Saudi Budget 2020
The government of Saudi Arabia presented the 2020 budget on Tuesday.
Striking a balance between economic growth and fiscal sustainability was the key objective, shown by the fact the budget deficit is forecast to stay below 30 percent of GDP through 2022.
Oil revenues should fall below 2019 estimates, owing to the collection of special dividends.
Oil proceeds disappointed in 2019 because the average price for the year stood at $64.2 per barrel compared to $ 73.1 in 2018.
Sector reforms, particularly in finance, are underway and the benefits can already be felt.
The conference focused on the uses, and only marginally on the sources of funds.
Four key themes straddle the various government branches. There is a strong focus on encouraging increased private sector activity in the economy.
Minister of Economy and Planning Mohammed Al-Tuwaijri considered the performance of the non-oil sector the key benchmark for the performance of the economy overall.
The share of non-oil revenues has consistently grown, from 7 percent in 2010 to an estimated 16 percent in 2019, and is expected to grow further.
Mining is particularly important in that context. Darren Davis, CEO of Maaden, was one of two private sector representatives on the stage.
The budget is geared to fulfil the goals of Vision 2030, diversifying the economy away from dependence on oil, providing jobs and delivering government services to people efficiently.
He illustrated how a good public-private partnership can bring success to all parties involved.
Maaden became one of the world’s top 10 mining companies over the span of a decade, because it benefited from infrastructure projects such as railways, roads, ports and intelligent regeneration projects for wastewater.
This goes to show that private sector industry can flourish, if government helps it to.
The second thread was improved deliverance of public services. Private sector involvement is increasing here too, through privatization of hospitals and schools, and in the form of contracting private suppliers.
The third theme was digitization. Plans for the roll out of 5G are progressing well, and improved infrastructure is felt throughout, saving, for instance, 30,000 hospital trips this year alone, according to Abdulla Alswaha, minister of communication and information technology.
Saudi Arabia has climbed to the top rank in the World Bank’s ease of doing business statistics as far as digital communication is concerned.
The fourth was employment creation, particularly important in light of the fact that 70 percent of Saudi citizens are under 30 years old. This is why education took 16 percent of the budget.
All in all, the budget is geared to fulfil the goals of Vision 2030, diversifying the economy away from dependence on oil, providing jobs and delivering government services to people efficiently.
• Cornelia Meyer is a business consultant, macro-economist and energy expert.