The Council of Ministers, in its session held under the chairmanship of the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, approved today, Jumada I 8, 1443 AH, corresponding to December 12, 2021 AD, The general budget of the state for the fiscal year 1443-1444 AH (2022 AD), with a total expenditure of 955 billion riyals, total revenues of about 1045 billion riyals, and a surplus of about 90 billion riyals.
Strong support for the health and private sectors
<On this occasion, His Excellency the Minister of Finance Mr. Mohammed bin Abdullah Al-Jadaan extended his thanks and congratulations to the Custodian of the Two Holy Mosques King Salman bin Abdulaziz and His Royal Highness Prince Mohammed bin Salman bin Abdulaziz, Crown Prince, Deputy Prime Minister and Minister of Defense - may God protect them - on the occasion of the approval of the state's general budget, indicating that the realistic and responsible policies and measures taken by the government in dealing with the COVID-19 pandemic have limited the human, financial and economic consequences by providing strong support for the health and private sectors while maintaining financial sustainability in the medium and long term. He pointed out that the budget confirms the keenness of the government of the Custodian of the Two Holy Mosques to move forward towards enhancing economic growth in the post-pandemic phase, harnessing financial resources to spend on health, education and the development of basic services, in addition to the continuation of social support and subsidies, indicating that the budget comes as a continuation of the process of reforms supporting the development of public finance management, with the government's commitment to maintain the previously announced spending ceilings, ensuring financial sustainability in the medium term and a strong financial position that enables the state to face any emergency variables and absorb unexpected economic shocks.
Supporting development funds and the Public Investment Fund
<Al-Jadaan pointed out that the budget estimates for 2022 show that total revenues will reach 1045 billion riyals, an increase of 12.4% over what is expected to be achieved in 2021, while total expenditures are estimated at about 955 billion riyals, while surpluses are expected to achieve about 90 billion riyals (or 2.5% of GDP).5% of GDP), indicating that these surpluses will be directed to strengthen government reserves, support development funds and the Public Investment Fund, consider the possibility of accelerating the implementation of some strategic programs and projects with an economic and social dimension, or repay part of the public debt according to market conditions.
Reducing public debt to about 25.9 %
<With regard to public debt, His Excellency explained that its indicators are expected to improve in 2022 to decrease to about 25.9 % of GDP compared to 29.2% in 2021 as a result of expectations of achieving budget surpluses as well as GDP growth, provided that borrowing is done to repay the principal maturing in the future or to exploit favorable market opportunities to support reserves or finance capital projects that can be accelerated through annual issues, pointing out that the debt-to-GDP ratio is expected to remain at appropriate levels in 2024 to reach 25.4%, and that the government is working on developing a risk management framework that aims to follow up and monitor the most prominent developments in the the local and global economy, to identify the risks and their implications. He explained that the government seeks in 2022 and in the medium term to support the continuation of the recovery in economic activity, while maintaining the initiatives that have been launched during the past years, and the commitment to achieve the targets of the Kingdom's Vision 2030 by reducing dependence on oil revenues, diversifying the economy and developing non-oil revenues and ensuring their sustainability, pointing to the progress made during the past period in implementing programs to achieve the vision and major projects as well as investment projects in various sectors, including infrastructure projects.
The government seeks to support the continuation of the recovery in economic activity, while maintaining the initiatives that have been launched in the past years.
<The Minister of Finance explained that the Kingdom's economy is witnessing a continuous growth in the role of economic enablers supporting the private sector, headed by the effective developmental contribution of projects and programs carried out by the Public Investment Fund and the National Development Fund, in addition to the progress in the implementation of the National Industry and Logistics Development Program (NEDLIP), the National Investment Strategy, the Shrek Program, the Financial Sector Development Program and privatization, pointing out that the success of these enablers reflects positively on public finance performance by stimulating and diversifying economic growth, thus improving revenues. The forecast for 2022 indicates real GDP growth of 7.4% driven by the rise in oil GDP associated with the OPEC+ agreement, in addition to the expected improvement in non-oil GDP with the continued recovery of the economy and the implementation of projects and programs supporting growth and economic diversification.
Transition to financial sustainability
About the fiscal sustainability program, he explained that the gains and fundamental transformation during the previous period in the way public finances are managed required to move from the fiscal balance stage to a stage that seeks to maintain fiscal sustainability through effective planning tools that evoke spending requirements over a longer period of time. He pointed out that the program is expected to achieve many benefits on the economic side, as it will contribute to continuing to achieve stable growth rates for the non-oil economy, mitigate the impact of energy price fluctuations on the national economy, and enhance the ability of the private sector to plan investments clearly. On the public finance side, it will contribute to enhancing the effectiveness of fiscal planning, increasing the efficiency of government spending, and utilizing budget surpluses to strengthen financial reserves or direct them to investment spending to ensure economic diversification and achieve sustainable economic growth targets in the medium and long term.
<His Excellency concluded his statement that the 2022 budget comes as a result of planning and participatory work between all government agencies, where efforts were exerted, capabilities were harnessed and energies were mobilized in preparing this budget in an appropriate manner through which it achieves its strategic objectives in order to emerge with the utmost transparency and clarity, based on the government's direct commitment to the financial and economic situation, through the issuance of budget-related reports such as performance reports: Quarterly, semi-annual, annual, and preliminary, in addition to the budget statement and the citizen's version, in line with the Kingdom's Vision 2030.
