Despite the fact that the global economy is still suffering from the effects of the COVID-19 pandemic, the Saudi economy has managed to begin recovering quickly from the worst of these effects. This is especially true when we consider the positive economic and financial performance in the second quarter of this year, and the expected positive performance next year.

The 2022 pre-budget statement issued by Ministry of Finance this week confirmed that the local economy is recovering rapidly from the effects of the pandemic, with sustainable economic and financial growth this year and expected next year. Economic indicators suggest ongoing recovery in most economic activities and in some sectors, especially non-oil sectors.

The government initiatives designed to protect the national economy from the worst consequences of the pandemic have worked well and paid off: non-oil gross domestic product grew by 5.4 percent in the first half of this year, backed by a 7.5 percent real increase in private-sector activities. Likewise, initial forecasts for 2022 indicate 7.5 percent growth in real GDP, benefiting from healthy growth in non-oil GDP.

In addition, it is expected that the noticeable uptick in the Kingdom’s economy will reflect positively on budget revenues in the medium term. Total revenue is expected to reach SR903 billion ($240.8 billion) in 2022 and about SR992 billion in 2024. This will help to support government efforts to sustain economic growth, especially when considering the continuing implementation of fiscal initiatives and economic reforms that aim to enhance non-oil revenues and control public expenditure.

As set out in the pre-budget statement, the government is aiming for a public-spending ceiling of SR955 billion next year, and SR951 billion in 2024. This will support government efforts to prioritize government spending based on development needs.

The National Debt Management Center indicated that the annual borrowing plan is being set to meet funding needs within the framework of medium-term debt strategy. The public debt is expected to reach SR989 billion next year, representing 31.3 percent of GDP. However, this amount of public debt is anticipated to remain flat in the medium term and so the debt-to-GDP ratio is projected to drop to 27.6 percent in 2024.

It is very clear that the Saudi government is firm in its resolve to continue its program of economic and fiscal reforms by implementing the necessary measures to ensure fiscal sustainability, enhance fiscal discipline and control budget-deficit levels. It is estimated that the deficit will be 1.6 percent of GDP in 2022 and it is expected to continue to decrease gradually in the medium term.

Minister of Finance Mohammed Al-Jadaan has pointed out that the government will continue to provide opportunities through the privatization program by supporting public-private partnerships on the domestic and international levels in numerous sectors, including water, health, housing and media.

The program also aims to increase the private sector’s contribution to GDP from the current 40 percent to 65 percent by 2030. The private sector is expected to grow at a higher rate than before, fueling economic growth and creating jobs for Saudi men and women.