The global economy has been paralyzed by the pandemic. However, Saudi financial figures prove the success of its Vision 2030 goal to diversify the economy away from hydrocarbons. For instance, in 2004 the average Brent crude price was around $40 per barrel and Saudi Arabia’s revenue was SR392 billion ($104 billion). On the other hand, in 2020 Brent crude was $40 per barrel while Saudi revenue was SR770 billion, almost double, while the average oil price remained more or less at the same level.
The success of the Saudi government’s financial strategies has reaped its fruits despite the pandemic, which put the whole world in a state of panic. While the world faced a sudden bleak economic darkness, the Kingdom was one of the most prepared countries in the world due to its grand vision to transform its economy and finances.
The budget for 2021 represented a return of growth and dependence on non-oil revenues, with spending estimated at SR990 billion, revenues of SR849 billion and a fiscal deficit of SR141 billion.
The estimated non-oil revenues in 2021 amounted to SR358 billion, 53.5 percent of total revenues, compared to oil revenues in 2020 amounting to SR491 billion. This indicates that the Kingdom continues to move away from dependence on oil and diversify its sources of revenue.
Non-oil revenue is one of the most important goals of Vision 2030, and its percentage in 2020 reached 46.5 percent, the highest ever. This is a very important development as it means the Kingdom is no longer at the mercy of volatile oil prices, which for many years have disrupted development plans. The 2021 budget will achieve good growth in light of it being less dependent on oil revenues.
As for the private sector, low interest rates will help its speedy recovery from the crisis, with rates likely to remain low for at least the next two years. This will be a catalyst for the private sector to expand into new sectors and projects, while the financing costs for companies will decrease.
More important than the numbers is the need to put effective and reassuring financial management in place. Here it is necessary to commend the Kingdom’s financial management, led by the Ministry of Finance.
It has worked tirelessly to put the focus on performance and results, efficiently and effectively considering the best options, and emphasizing its uncompromising commitment to transparency and accountability.
By adopting the highest of standards, the ministry has achieved great progress and reform in a short period, and its modernization drive will have sustainable positive results for the wider Saudi economy and society.
• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter: @faisalfaeq
