The International Monetary Fund called on the Kingdom of Saudi Arabia to introduce an added tax on white land, as part of a package of recommendations and reforms by which the Kingdom compensates for the losses resulting from the decline in oil prices, describing the Kingdom's economy as the strongest and most developed economy in the G20, benefiting from the escalation in oil prices and increasing its production in previous periods, and managed to achieve large surpluses in public finances and the external account, and its high government spending led to strong activity in the private sector, but global oil market prices witnessed a significant change over the past year with oil prices falling by about 50%.
. In addition, the Fund's executive directors recommended that the Kingdom should take gradual corrective measures to address public finances over the coming years to compensate for the losses resulting from the low oil markets that swept the global markets, including introducing tax fees on white land, energy prices and public sector wages, expanding non-oil revenues, and encouraging private sector investments to counter the decline in oil prices.
The Fund's executives recommended that the Kingdom should take gradual corrective measures to address public finances over the coming years to offset the losses resulting from low oil prices. This came in a statement by the Executive Board of the International Monetary Fund during its assessment of the performance of the Saudi economy at the conclusion of the 2015 Article IV consultation with the Kingdom, where the Executive Directors praised the strength of the Saudi economy, noting that the significant decline in oil prices is likely to affect growth in the coming period.
The Executive Directors praised the strength of the Saudi economy, noting that the significant decline in oil prices is likely to affect growth in the coming period. Directors considered the main risks to the economic outlook to be uncertainty about future oil prices and the potential for heightened regional tensions, while praising the Kingdom's commitment to promote stability in the global oil market and provide financial support to developing countries in the region.
The IMF expected the Saudi economy to perform well. <Real GDP growth is expected to slow to 2.8% this year, then 2.4% in 2016 as government spending begins to adjust to the prevailing decline in oil prices, and reach around 3% in the medium term. Inflation is expected to remain subdued. Central government finances are expected to record a deficit of 19.5% of GDP in 2015 and remain high in the medium term, although the deficit is expected to decline in 2016 and beyond as spending on non-recurring items ends and major investment projects are completed. However, the level of government debt was 1.6% of GDP at the end of 2014.
Note that the level of government debt was 1.6% of GDP at the end of 2014.
