It is worth noting that the economy of Saudi Arabia has not been directly influenced by the Russian-Ukrainian war, as neither country is among the Kingdom’s major trading partners. However, Russia’s involvement in the war has impacted oil prices, leading to their global rise. As Saudi Arabia’s oil revenues grow significantly, Saudi policymakers’ considerations have centered on managing them in order to support a more diverse economy. Per the International Monetary Fund’s report, the main priorities are “(i) maintaining fiscal discipline through broad-based fiscal consolidation; (ii) ensuring financial stability post-COVID; and (iii) implementing structural reforms to support strong, sustainable, and inclusive growth” (Saudi Arabia: 2022 Article IV Consultation-Press Release, 2022). Despite the remarkable oil profits, the Kingdom’s government spending remains restrained in line with the pre-existing budget plans. Based on this information, it can be concluded that the Saudi authorities are choosing for the fiscal policy to remain tightened; instead, they are relying on monetary policy tools to boost the economy.
Moreover, the expansion of the private sector has been promoted by lowering start-up costs and boosting competition through the creation of financial policies that encourage investment. The report states that extensive measures have been taken to enhance the business and regulatory climate, draw foreign investment, and increase employment in the private sector (Saudi Arabia: 2022 Article IV Consultation-Press Release, 2022). These policies resulted in MSMEs continuing to benefit from deferred payments. Overall, based on the aforementioned information, Saudi Arabia’s private sector is keeping its “steady growth” (Saba, 2022). While Saudi Arabia’s fiscal policy is headed towards consolidation, the tax policy remains beneficial for the private sector, leading to its continued development against the backdrop of the Russian-Ukrainian war.
References
International Monetary Fund. (2022). Saudi Arabia: 2022 Article IV Consultation-Press Release; and Staff Report. Web.
Saba, Y. (2022). Saudi non-oil private sector keeps up steady growth in September. Reuters. Web.