The International Monetary Fund has urged Saudi Arabia to push ahead with measures to cut the government wage and subsidy spending, while also taking steps to protect the welfare of low-income households.
The Washington-based lender “supported the authorities’ planned medium-term fiscal consolidation but emphasized the need to continue enhancing the social safety net in the near term to support low-income households,” according to a statement issued Thursday after its regular Article IV consultation with the government.
The IMF also revised its economic growth projection for the kingdom to 2.4% from 2.1% earlier, as it gradually recovers from last year’s downturn. The oil-sector economy is expected to contract 0.4% as production is set to remain in line with the OPEC+ agreement, while non-oil growth is seen at 4.3%, an upward revision from 3.9% in May.
“The economy is recovering well,” according to the fund, but “while central government fiscal consolidation will be a drag on growth, it is expected to be offset by higher Public Investment Fund investment and strong private demand.”
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