Reforms implemented by Saudi Arabia were commended by the International Money Fund (IMF) Executive Board on Friday.
The country is working to compensate for uncertainties about oil prices and increase non-oil growth. The IMF holds bilateral meetings with its members under Article IV, usually annually, to discuss domestic and economic developments and policies.
While non-oil projections show a 1.7 percent increase in 2017, the oil gross domestic product (GDP) growth is expected to decline due to the OPEC+ agreement, leaving the country with zero GDP growth.
The Consumer Price Index (CPI) inflation has dropped to negative numbers, while employment growth has slowed and the unemployment rate increased to 12.3 percent. The economy is responding to the lower oil prices and fiscal reforms and is expected to strengthen growth as structural reforms are incorporated.
Saudi Arabia’s reform program under Vision 2030 has been initiated. It includes fiscal consolidation, improvements in the business climate and increased transparency and accountability in government.
The IMF directors noted the efforts to reform energy prices and encouraged efforts to reduce the impact of price increases on low- and middle-income households. They also noted the progress in private sector growth.
In addition to Saudi Arabia’s efforts to improve employment of its citizens in the private sector, the directors welcomed efforts to improve the financial safety net. They also agreed that pegging the exchange rate to the U.S. dollar is appropriate at this time and recommended reviewing it regularly to ensure that the continued fiscal adjustments keep the peg relevant to the economy.
