Budget deficit projected to fall 51%

RIYADH — The deficit in the General Budget for the year 2021 is expected to fall sharply by 51.34 percent, reaching SR145 billion compared to the projected deficit of SR298 billion in the budget of the current year 2020.

According to the preparatory statement of the budget for the year 2021, issued by the Ministry of Finance on Wednesday, the deficit is expected to reach 5.1 percent of the gross domestic product (GDP). The total expenditure is expected to reach SR990 billion, while the revenues will post an increase of 9.87 percent reaching SR846 billion as compared to that of the year 2020.

The statement indicated that the initiatives taken such as the introduction of expatriate fee and increasing the value-added tax (VAT) rate to 15 percent would continue. According to the ministry projections, public debt is expected to reach SR941 billion, representing 32.9 percent of the GDP.

The ministry announced that the public debt strategy aims to diversify financing tools between issuing bonds and sukuk, and to continue researching new markets and financing methodologies through alternative government financing. This is aimed to continue and complete major development projects and thus contributing to increasing private sector participation by providing the necessary financing for priority sectors.

Expat fee, VAT

The ministry indicated that the initiatives that were introduced in the past would continue to remain in place such as the financial compensation for expatriates (expat fee), the continuation of the gradual correction of energy prices until reaching reference prices and ensuring the sustainability of non-oil revenues to confront the coronavirus pandemic that was applied such as raising VAT rate to 15 percent and an increase in customs duties for some goods.

The ministry expects that the total revenues would reach SR846 billion, an increase of 9.8 percent from what is expected in 2020, supported by the recovery of the local and global markets, and it is expected that growth will continue by increasing revenues to reach SR928 billion in 2023, with an average annual increase of 6.4 percent.

31 new companies and 104,000 jobs

The ministry announced that the Public Investment Fund (PIF) is currently studying the establishment and development of 31 companies in various sectors to support the national economy. This comes after PIF established more than 20 new companies operating in many promising local sectors such as entertainment, tourism, military industries, and start-up financing.

The PIF has contributed to the creation of a total of 104,000 jobs, and these included more than 11,000 direct jobs, over 5,000 indirect jobs, and more than 88,000 jobs in the contracting and construction sector.

This is in addition to training national cadres in promising sectors and developing 165 products intended for graduates. The statement also noted that Qiddiya mega project will provide 80 scholarships in the entertainment sector.

SR9.8 billion support to confront COVID-19

The ministry statement also showed that the value of the support provided by the government programs and initiatives since the outbreak of the coronavirus pandemic from March until mid-September amounted to more than SR9.8 billion, benefiting over 211,000 individuals, and more than 16,000 establishments. The National Development Fund monitored a budget of more than SR22 billion for a total of 19 programs and initiatives to support individuals and private sector establishments to mitigate the negative impact of the pandemic crisis, the statement pointed out.


Source: https://saudigazette.com.sa/article/598661/SAUDI-ARABIA/Budget-deficit-projected-to-fall-51


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