Report : Saudi Arabia’s economic targets for FY21 are realistic
The Saudi economy experienced double impact of COVID-19 pandemic in 2020 in the form of low oil prices and demand as well as slack in economic activities, with both oil and non-oil revenue remaining under pressure during the year, AlJazira Capital said in a report on Sunday.
Due to the precautions taken by the government, expenditure crossed the budgeted level, resulting in an estimated fiscal deficit of SAR 298 billion.
However, the initiatives such as the SAR 50 billion package from the Saudi Central Bank (SAMA), the SAR 9 billion allocation to support private and public sector employees hit by the crisis, and the increase in value-added tax (VAT) and customs duties helped moderate the negative impact on the economy to some extent, AlJazira added.
In fiscal year (FY) 2021, the government plans to significantly cut the fiscal deficit. Revenue is set to grow with oil prices crossing the $50/bbl mark towards the end of FY20. Lending further support to this is the optimism on economic recovery post Saudi FDA approving the COVID-19 vaccine and the hike in the VAT rate, the research firm noted.
On the other hand, the government plans to cut spending for almost all sectors and intends to cut CAPEX in FY21 to curb the outflow of funds.
“Continued focus on Vision 2030 initiatives and increasing private sector participation would drive stronger and collaborative economic activities in the kingdom. We believe that the kingdom’s economic targets for FY21 are realistic and the economy is well placed to achieve these targets,” AlJazira concluded.