Saudi finance ministry boosts Kingdom’s business environment with new law

The legislation comes as the Kingdom continues to work towards its Vision 2030. (File/AFP)
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Updated 25 December 2019

Saudi finance ministry boosts Kingdom’s business environment with new law

  • New government tender and procurement law
  • Legislation focuses on local businesses, small-to medium-enterprises and publicly listed companies

DUBAI: Saudi Arabia’s Ministry of Finance (MoF) has implemented a new government tender and procurement law that promotes the local business environment, as well as improve efficiencies in government spending and financial planning.

The legislation, which comes as the Kingdom continues to work towards its Vision 2030, puts focus on local businesses, small-to medium-enterprises (SMEs), and publicly listed companies – granting them preference in public tenders.

The law also appoints the Center of Spending Efficiency (CSE) with functions including finalizing framework agreements on procurements, reviewing feasibility studies, and developing training programs for government employees.

Among the highlights of the new law is the additional requirement government agencies to publish their plans and procurements into an online platform called “Etimad” to ensure quality in projects and services.

The online system would also “introduce mechanisms and committees to consider complaints, grievances, violations and solving disputes throughout all stages of tendering and contracting,” according to a release by the MoF.

“The new law aims to regulate and facilitate government procurement, prevent exploitation of influence and impact of personal interests, achieving the best value of public funds.”

It was implemented to promote “integrity, transparency, achieving equality, providing fair treatment to bidders and promoting economic development.”


Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 01 October 2020

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.