Saudi Arabia Unveils Its 2018 Budget: Economists’ Reaction - Bloomberg

Saudi Arabia Unveils Its 2018 Budget: Economists’ Reaction - Bloomberg:

"Saudi Arabia released its second budget since unveiling proposals to reduce the kingdom’s dependence on oil. Here economists comment on the numbers, prospects for crude prices and the direction of government policy. Monica Malik, chief economist at Abu Dhabi Commercial Bank: “This budget is trying to support economic growth rather than just focus on fiscal austerity and reducing the deficit, which was the case in the past few years. The increase in oil price gives them some fiscal space.” “Saudi Arabia still has to show some fiscal consolidation to the international bond holders and rating agencies. “The non-oil revenue, especially the tax revenue, looks optimistic especially since we think non-oil activity will not see the same boost as projected in the budget. In fact, we think there could be a moderate decrease in real non-oil GDP growth with the introduction of VAT and the increase in electricity prices.” Mohamed Abu Basha, Cairo-based economist at EFG-Hermes: “Generally the economy will remain under pressure at least in the first half due to the inflationary impact of the reform measures and uncertainty” about the extent of compensation from the Citizen Account program to help needy Saudis. “Next year we should see a bigger role for state funds, led by the PIF,and going forward these funds will be playing a bigger role in setting total public investment spending.”"



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