Saudi Arabia’s macroeconomic position is expected to improve in 2003 compared to last year, said the International Monetary Fund (IMF) in its recently concluded Article IV consultation on the Kingdom.
Oil prices have firmed in 2003 and Saudi oil output in the first half of the year has been higher than in recent years. The fiscal accounts would likely be in balance and public debt is projected to decline.
According to a Public Information Notice (PIN), Saudi Arabia’s overall real growth slowed in 2002. Oil output dropped following the Organization of Petroleum Exporting Countries (OPEC) mandated production cuts, and real non-oil GDP growth picked up modestly to 3.6 percent as private investment continued to be weak. Inflation, however, remained negative and involuntary unemployment stood at about nine percent.
The fiscal position weakened despite some strengthening of fiscal effort, reported IMF. The overall central government budget deficit increased to six percent of gross domestic product (GDP) as oil revenues fell and non-oil revenues showed only a small increase. However, the non-oil primary deficit fell in 2002 and government domestic debt rose to 97 percent of GDP.
The IMF’s Article IV consultation predicts that the external account surplus for 2003 is expected to be higher than in 2002 and SAMA's net foreign assets could rise to the equivalent of 10 months of prospective imports. Real non-oil GDP growth is expected to show a pickup, domestic liquidity is projected to fall towards more normal levels with the improving fiscal balance, and credit to the private sector is expected to moderate.
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. At the conclusion of discussions, the IMF Board of Directors summarizes its views and a summary is transmitted to the country's authorities. — (menareport.com)
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