The Kingdom of Saudi Arabia aims to control the public debt in the country, and work to stabilize it until 2024.
The Saudi Ministry of Finance said that controlling public debt is part of the government’s efforts to enhance spending efficiency and achieve financial discipline goals.
The Ministry of Finance expected a debt of about 989 billion riyals in the 2022 budget, a growth of 5.5 percent compared to the expected debt size in 2021 of 937 billion riyals.
With these expectations, the slowdown in public debt growth continues for the sixth consecutive year.
The Ministry of Finance also expected that the debt volume for the 2022, 2023 and 2024 budgets would stabilize at 989 billion riyals, compared to previous estimates of 1016 billion riyals in 2022 and 1029 billion riyals in 2023.
This comes after the Coronavirus pandemic crisis, which affected the economies of the whole world, which pushed the debt above the target level, especially after the Minister of Finance confirmed that the government will increase borrowing this year to confront the pandemic.
The fiscal policy in Saudi Arabia aims to achieve a balance between the objectives of maintaining financial stability, promoting sustainable economic growth, and supporting the stage of economic and social transformation that Saudi Arabia is going through, in accordance with the Saudi Vision 2030.
During the current and next two years, the expected growth of debt is at 9.7 percent in 2021 and 5.5 percent in 2022, which are very low growth levels compared to the previous five years in which debt recorded high growth rates.
Stop the debt
In 2023, the debt is expected to record zero growth, thus stopping the growth of public debt for the first time since 2016, when the debt recorded a growth of more than 100 percent at that time.
The stability of the debt size in the medium term is due to the Ministry of Finance’s expectations of achieving budget surpluses starting from 2023, and directing issuances to repay the debt, and through this, Saudi Arabia will enhance maintaining appropriate rates of government reserves, to enhance its ability to deal with shocks.
The fiscal policy in Saudi Arabia also aims to strengthen government reserves with the Central Bank, to continue increasing in the medium term, supported by the surpluses expected to be achieved in 2023 and 2024.