(AFP) – The International Monetary Fund on Thursday welcomed accelerated economic reforms by Saudi Arabia to reduce its reliance on
oil but said more measures are needed to cover a fiscal deficit.
Over the past 12 months “there has been a significant acceleration in reforms in Saudi Arabia,” an IMF team said in a statement following a visit to
It said the Vision 2030 plan, announced by Riyadh last month, sets a bold and far-reaching transformation of the economy to diversify growth, reduce
dependence on oil and increase the role of the private sector.
The foundation of the plan, launched by Deputy Crown Prince Mohammed bin Salman, is the sale of less than five percent of state oil giant Saudi Aramco
in what officials say will be the world’s largest ever initial public offering.
Proceeds from the share offer will contribute to creating the biggest government investment fund in the world, with a value of ê2 trillion, whose
profits can provide an alternative to lower oil revenues.
Saudi fiscal policy is appropriately adjusting to the drop in oil prices,” said the IMF, welcoming the control of public spending and energy price reforms.
It said more actions were needed to balance a budget deficit estimated at 14 percent of gross domestic product this year.
“Such fiscal consolidation should include further adjustments in domestic energy prices, firm control of expenditures, and further increases in non-oil
revenues,” the IMF said.
It welcomed the planned introduction of a value-added tax in 2018 and other tax measures.