IMF Report Commends Saudi Fiscal Policies
The International Monetary Fund (IMF) applauded Saudi Arabia’s fiscal policies and characterized its economic outlook as “broadly positive” in a new report assessing the Kingdom’s economic conditions. In its Article IV Consultation Report, concluded July 13, 2009, the IMF Executive Board found that, “Saudi Arabia confronts the current global crisis from a position of strength, reflecting a track record of prudent macroeconomic policies and structural reforms that have enhanced the economy’s resilience.”
As a result of strong government action, it noted, the Saudi economy “delivered another strong performance in 2008 despite global headwinds. Real GDP, buoyed by a sustained broad-based expansion in the non-oil sector (4.3 percent) and higher oil production, grew by 4.4 percent.” The IMF found that the Kingdom’s inflation and domestic debt are declining, while its foreign direct investment remained high at about $23 billion in 2008. Furthermore, it said, the Saudi banking system “has weathered the global crisis. It remains profitable and well capitalized with low nonperforming loans.”
The IMF credited proactive fiscal policies for the Kingdom’s economic resiliency, particularly commending authorities for approving a massive stimulus package that “appropriately focused on capital spending” and contributed “both to diversified domestic growth and the global recovery.” The report also lauded Saudi officials for “their leadership role in stabilizing world oil markets by maintaining their capacity expansion plans despite lower oil prices.”
The Executive Board expressed its support for the Saudi government’s ongoing efforts “to implement second-generation reforms in the judicial, education, and financial sectors, aimed at further improving the environment for private sector development” and welcomed “the continued liberalization of the trade regime, consistent with the authorities’ commitment to a free and open trade system.” They pointed out that Saudi Arabia was ranked first among Arab countries and 16th globally by the latest World Bank Doing Business Report.
Finally, the Kingdom was commended for the “substantial assistance” it has extended to developing countries, including its support for the Heavily Indebted Poor Countries (HIPC) and Energy for the Poor” initiatives.