Riyadh – Mubasher: The International Monetary Fund (IMF) expected non-oil growth in Saudi Arabia to rise to 1.7% in 2017.
Additionally, total gross domestic product (GDP) growth is forecasted to be close to zero, as oil GDP drops in in the framework of the kingdom’s commitments under the Organization of the Petroleum Exporting Countries (OPEC) agreement
“Growth is expected to strengthen over the medium-term as structural reforms are implemented,” The IMF said in a recent report.
“Risks mainly come from uncertainties about future oil prices, as well as questions about how the ongoing reforms will affect the economy,” the American organisation added.
The IMF noted that CPI is anticipated to increase over the coming year due to the recently applied selective taxes, energy price reforms, and the introduction of the value-added tax (VAT) at the beginning of 2018.
The IMF anticipated that the country’s fiscal deficit to decline to 9.3% of GDP in 2017 from 17.2% of GDP and to decrease below 1% of GDP by 2022.
“This assumes that the major non-oil revenue reforms and energy price increases outlined in the Fiscal Balance Program are introduced on schedule and that operational and expenditure savings identified so far by the Bureau of Spending Rationalizations are realized,” the IMF indicated.
The Organisation forecasted current account balance to achieve a small surplus in 2017 as oil export revenues increase and import growth and remittance outflows remain relatively subdued.
The IMF’s executive directors said that the Saudi economy is adjusting to the effects of lower oil prices and the current fiscal year’s adjusting procedures, but non-oil growth is expected to improve this year.
Moreover, overall growth is likely to rise over the medium term as structural reforms are implemented, executive directors added.
Directors welcomed the authorities’ plans to perform more reforms at energy prices.
Furthermore, they stressed the importance of ensuring equitable reforms and supported the planned household allowance to alleviate the impact of higher price on low- and middle-income households.
A number of directors thought that gradual phasing of the price increases will allow households and businesses to adjust for longer time.
