Saudi finance minister says reserves not falling below certain percentage of GDP

Saudi finance minister said that reserves not falling below certain percentages of GDP-fin min DAVOS Reuters said Saudi Arabia's policy on fiscal sustainability would ensure that reserves do not fall below a certain percentage of the country's gross domestic product.

In its budget for 2022, the world's biggest crude exporter, estimated at $1 trillion, said that the Fiscal Sustainability Programme aims to decouple the economy from oil price fluctuations, realising several economic benefits for the non-oil economy and the private sector.

The Minister of Finance Mohammed al-Jadaan told the World Economic Forum in Davos that we are at a final stage of designing our fiscal sustainability policy.

Our reserves will not fall below a certain percentage level of GDP, according to the policy. That figure would be in the double digits. Jadaan said excess money can be directed towards the Public Investment Fund PIF the country's $600 billion sovereign wealth fund, and the National Development Fund NDF In the past five years, we have spent trillion riyal from reserves and we are still replenishing them.

Foreign reserves dropped from a record high of $737 billion in August 2014 to $529 billion at the end of 2016 as the government liquidated some assets to cover the huge budget deficit caused by the fall in oil prices.

The net foreign assets of the Saudi central bank were at 1.63 trillion riyals $434.57 billion at the end of March.

The budget document states that the government reserves at the Saudi central bank are projected to hit 350 billion riyals by the end of 2021.

Jadaan said Saudi Arabia will consider cutting the rate of value-added tax VAT, which was increased to 15% in 2020. The VAT rate was tripled to shore up finances hit by low oil prices as the pandemic hit global demand.

In the aftermath of the Russia-Ukraine conflict, oil prices have risen past $100 a barrel this year, resulting in a $15.33 billion budget surplus for Saudi Arabia in the first three months of 2022. $1 3.7508 riyals