Saudi Arabia has begun a major policy shift to respond to low oil prices, said International Monetary Fund (IMF) Managing Director Christine Lagarde after she attended key meetings in Riyadh.
“Vision 2030 and the National Transformation Program (NTP) contain ambitious policy reforms to reduce the economy’s reliance on oil, strengthen non-oil growth, and increase employment opportunities,” said Lagarde.
“These reforms are very welcome. I look forward to the authorities laying out, prioritizing, and sequencing the policy measures to be implemented, with a view to reducing the risk of implementation bottlenecks and allowing businesses and individuals time to adjust,” she said.
In a statement issued in Riyadh, Lagarde also said she welcomed steps that Saudi Arabia has taken to reduce its reliance on oil and increase new employment opportunities.
“Fiscal adjustment has started, with the government containing expenditures and raising additional revenues,” Lagarde said.
“These efforts should continue over the medium-term including through further increases in energy prices which are still low by international standards, further revenue-raising measures including from the planned introduction of excises and the VAT at the GCC level, and further spending restraint.”
Saudi Arabia should continue to rein in its spending and seek more ways to raise revenues despite recent increases in oil prices, Lagarde added.
At the conclusion of a visit to Riyadh, Lagarde said: “It has been a great pleasure to visit Riyadh, Saudi Arabia, where I had the privilege of meeting Custodian of the Two Holy Mosques King Salman.
“We discussed the economic outlook and current policy developments in Saudi Arabia.
"I had fruitful discussions with Finance Minister Ibrahim Al-Assaf and Saudi Arabian Monetary Agency Gov. Ahmed Alkholifey.
“I was also pleased to participate in the GCC finance ministers and central bank governors meeting, where we exchanged views on the region’s outlook, challenges, and policy priorities.
“The meeting is an important forum for policymakers to discuss issues facing the region and possible avenues for policy cooperation,” she said.
Lagarde said: “Turning to the GCC, the reforms that the GCC countries have been implementing over the past year in response to the decline in oil prices are impressive. Continued fiscal adjustment will be needed over the medium term. Where possible, countries should phase in deficit-reduction measures gradually, while strengthening their medium-term fiscal frameworks and fiscal transparency to support the adjustment. Policies to support growth and employment will also need to continue.
“Over the past year, the IMF has further strengthened its relationship with the GCC countries through our regular country visits, our technical assistance, and our training program.
“The IMF stands ready to continue to support the GCC countries in addressing their challenge of adjusting to the lower oil price environment.
“I thank the minister of finance for Saudi Arabia, for chairing the GCC meeting and for his government’s generous hospitality.
“I also thank Abdul Latif bin Rashid Al-Zayani, GCC secretary general, and look forward to our continued cooperation,” said the IMF managing director.

Source: Arab News