RIYADH: Diversification is the key to economic growth and will also help with financial reforms in the Kingdom, a high-level forum was told.
A comprehensive study on public financial reforms was presented during the Riyadh Economic Forum by Dr. Mohammed Al-Abbas, who is a Shoura member in the financial sector.
He explained that economic diversification was the key to economic growth, emphasizing that economic growth would also unlock financial reforms in Saudi Arabia.
The positive effects of economic growth would lead to long-term benefits for the country, he added.
“There must be a fundamental shift in the form and structure of the Kingdom’s general budget model, so let’s move a little forward,” he said. “The development of the foreign trade system is important, because there is a marginal presence in non-oil exports, and the weak contribution of oil exports to domestic production.”
The study, which was carried out under the chairmanship of the assistant minister of finance for international financial affairs and financial policies, Abdul Aziz Al-Rasheed, confirmed the need to rationalize unproductive current spending, such as spending on public administration and subsidies to follow the gap between actual and budgeted spending to determine the causes and means of treatment, disclose this in a framework of transparency, develop non-oil revenue through reforming tax and customs duties system and address the imbalances affecting the private investment environment.
The assistant minister said that the Saudi government had in the past three years gone through a huge transformation, especially regarding teamwork between the public and private sectors, international organizations and the nonprofit sectors. These entities were the most important priorities for reform, indicating that economic growth in Saudi Arabia was directly related to government spending.
CEO and board member of Alinma Bank, Abdulmohsen Al-Faris, said: “There is still a very wide scope for a qualitative shift in the financial reform of the Kingdom of Saudi Arabia. The results that we saw in the study stemmed from a partial structural reform with regard to taxes and some fees. The private sector must be stimulated and strengthened, to make it contribute more to the domestic product, and to contribute to increasing non-oil revenues.”
The forum will tackle some of the main challenges facing the Saudi economy and was opened on Tuesday by Riyadh Gov. Prince Faisal bin Bandar.