The Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, chaired the Cabinet's session at Al-Yamamah Palace here today during which the State's General Budget for the fiscal year 1439/1440H was approved.
The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud addressed the nation, announcing the budget of the Fiscal Year 1439-1440 AH, as the largest expenditure budget through the history of the Kingdom, based on low oil price levels compared to previous years, in order to continue development and enhancement process towards achieving the Kingdom Vision 2030, that aims at increasing the size of the national economy and sustain its growth, through diversification of economic base, sources of income and the capacity to adapt with developments and overcoming challenges.
The King said that dozens of programs have been launched to realize the goals of diversifying the economic base and empower the private sector to play a major role, in sustaining expenditure efficiency, in order to realize appropriate economic growth rates, mitigate the burden on the citizens and tackle possible impacts, in addition to supporting the private sector.
The Custodian of the Two Holy Mosques hailed achievements related to decreasing the deficit of the budget of the current fiscal year that exceeded 25% compared to the last fiscal year, despite increasing the expenditure, adding that the target is to decrease the deficit of the next year budget to be lesser than 8% of the Gross Domestic Product, in spite of the great and expansionary volume of the budget.
The King stated that government programs have managed to downsize depending on oil to about 50%, adding that the development funds and the General Investments Fund take part in the capital and investment expenditure, with portions that exceeded capital expenditure volume, in the budgets of previous years, in addition to government keeping leading with capital expenditure, at an increase of 13%.
As a result, the government decided to invest these successes, expand development and adjust the fiscal balance program to be the year of balance (2023).
While maintaining fiscal policies, including the level of debt to GDP to remain below (30%) with a level of deficit to be gradually decreased.
This budget continues to disburse on various development sectors in all regions of the Kingdom at high rates, thankfully.
It also includes allocations for housing, and a large expenditure of government funds that would contribute to push the economic wheel forward, and provide more employment opportunities for male and female citizens.
We have directed ministers and all officials to raise the level of performance, develop government services and enhance the efficiency of expenditure and transparency to meet the aspirations and the satisfaction of male and female citizens for the services provided to them as well as to reflect the desired objectives of the allocated amounts in this budget, and the emphasis on continuing to fight corruption and maintain public money.
I have taken into consideration the continuation of work towards comprehensive and balanced development in all regions of the Kingdom, without any distinction.
We thank Allah Almighty for the blessing of security and stability, confident in the success and help of Allah Almighty, and depend on it, and look forward to continuing the path of economic growth and comprehensive development.
May peace, mercy and blessings of Allah Almighty upon you.
Prince Abdulrahman bin Mohammed bin Ayyaf, Secretary General of the Cabinet, reads the Royal Decree on the budget.
Then, the Custodian of the Two Holy Mosques signed the Royal Decree on the budget.
In a statement to Saudi Press Agency (SPA) following the session, Minister of Culture and Information Dr. Awwad bin Saleh Al-Awwad said that Mohammed bin Abdullah Al-Jadaan, Minister of Finance, provided a brief presentation on the State's General Budget in which he highlighted the financial results of the current fiscal year 1438/1439H and highlighted the key features of the State's General Budget for the new fiscal year 1439/1440H.
"It is expected that the real gross domestic product (GDP) growth in 2018 is to reach about %2.7. A number of measures will be implemented aiming to stimulate the performance of the economy during the next year, including the implementation of packages to stimulate investment and continue to pay any financial commitments to the private sector within sixty days, as a maximum, since all relevant procedures were taken in addition to allocation of larger amounts rather than former figures for a number of sectors, including housing, education and health.
The minister of finance added that there are efforts to encourage and facilitate investment procedures in the Kingdom, improve the level of government services, and implement projects in the construction, tourism, cultural and entertainment sectors, as well as privatization programs which is expected to provide new opportunities for growth of private investment and create more jobs and to develop a framework and regulation for a partnership between the public and private sectors.
Al-Jadaan disclosed that the government will continue to implement initiatives to reduce negative impacts of reforms on eligible citizens, including implementation of the Citizen Account Program which is one of the important initiatives to help those eligible for the support in order to address the additional costs that may result from correcting levels of energy prices and value added tax (VAT) through redirecting a support to the most eligible categories. The budget of the Citizen Account is expected to be SR32 billion in 2018.
The minister of finance disclosed that the Kingdom's government aims in the budget 2018 to reduce a deficit to %7.3% of the nominal GDP versus an expected deficit of about %8.9 of GDP in 2017.
He added that it is anticipated an increase in total revenues in the budget 2018 with about %12.6 in comparison with the expected in 2017 while the non-oil revenues increased by 14%.
Al-Jadaan pointed out the aspects of the domestic economy, highlighting that the macroeconomic indexes are expected to improve in 2018, in comparison with the previous year, pushed by a budget focused on expansionary capital spending and economic reform programs. He also expressed his anticipation that the stimulation and government's capital spending will contribute to the real economic growth rates in 2018 in addition to neutralization of the impacts of the fiscal sustainability policies. The unemployment rate among Saudis is expected to fall compared to the previous year.
He pointed out that the financial outlook for the medium term (financial balance program developments), its implementation mechanism and revenues and expenditures for fiscal year 2018, by saying: "the total revenue is estimated at SR783 billion, an increase with %12.6 of what have been expected in 2017. The spending is approved at SR978 billion, higher than the previous year by %5.6. This increase is pushed by expanding on the spending on the allocations of initiatives of the Vision 2030 programs."
He also spoke about the budget for the fiscal year 2018 at the level of sectors, the economic and financial risks and the positive factors on the economy.