Saudi Arabia: Fiscal Institutions, Budgeting, Risks & IMF Analysis

This presentation provides an overview of the main fiscal institutions in Saudi Arabia, focusing on fiscal aggregates, budget execution, and fiscal risk disclosure and management. It examines recent trends in fiscal balances, revenue and expenditure components, and public debt ratios. The presentation also discusses the extent to which budget expenditure and revenue outcomes reflect originally approved amounts, highlighting issues such as negative balances, high expenditure, and low revenue. It explores macroeconomic forecasting practices, noting the inclusion of governmental publications in budget documents and long-term fiscal projections. Furthermore, it addresses the need for alignment with IMF suggestions regarding contingent liabilities and identifies the absence of an independent agency to oversee public spending, despite the existence of the Saudi Arabian Monetary Agency (SAMA). The presentation concludes by discussing the top-down approach to budget preparation, restrictions on parliamentary budget amendments, and the flexibility in budget execution.

Presentation on the main
fiscal institutions of Saudi
Arabia

Fiscal Aggregates

Fiscal Aggregates

Budget Execution

Budget Execution

Budget Execution issue
Negative
balance
Low
revenue
High
expenditur
e

Macro-Fiscal Forecasting
In case of the Saudi Arabia no evidence of the mid-year budget
update.
However, when it comes to the governmental publication of the
macroeconomic forecasts, then the budget documents includes it.
As the IMF report showcase, the budgetary framework of the
government has been showcased from the year 2010 to 2022 that
highlights the present and expected outcome of the budgetary
performance (IMF 2018).
Long term fiscal projection is also there as can be seen from the IMF
report.

Fiscal Risk Disclosure and Management

Fiscal Risk Disclosure and Management
Saudi Arabian budgetary framework pays good amount of details
regarding the pension and other macro economic parameters.
However, the budgetary framework of the country fails to provide details
regarding the social commitments as well as the international
commitments (Malik 2016).

Fiscal Risk Disclosure and Management
According to the budgetary framework of the Saudi Arabia, it needs to
be aligned with the IMF suggestion of the contingent liabilities.

Independent Fiscal Agencies
Saudi Arabia has no comprehensive tax system as well as
budgeting system too. According to the Schiavo-Campo (2017), it
has been found that the country lacks in large amount in fiscal
deficit owing to the fact that there is now independent agency to
oversee the public spending
Saudi Arabian Monetary Agency, also known as SAMA
Though there is Saudi Arabian Monetary Agency, also known as
SAMA, it is incompetent and under the jurisdiction of the
government it tells only what that the government wants to hear
(Wilson and Graham 2016).

Top-Down Approach to Budget Preparation
Considering the budgetary framework of the Saudi Arabia, it
can be seen that the economy face trouble while formulation
of the budget and during the execution.
According to the research of Algarni et al. (2018), it has been
found that though the educational sector follows five year
planning method, however, in the case of other
expenditures, government uses bottom up approach.
It means that the government enhance or decrease the
spending depending upon the requests from the government
agencies.

Parliamentary Budget Approval
There is restrictions for the Saudi Arabian legislature to amend
the budget. Legislature in the country is focused to oversight
the power of the minority government rather than showing
interest regarding the amend to budgetary framework (Gupta
et al. 2016).

Flexibility in Budget Execution
Draft budget is
constructed
Parliament
approves
the same
Approval
of detailed
spending

Reference
IMF. (2018). Saudi Arabia : 2017 Article IV Consultation-Press Release; and Staff Report. [online]
Available at: https://www.imf.org/en/Publications/CR/Issues/2017/10/05/Saudi-Arabia-2017-
Article-IV-Consultation-Press-Release-and-Staff-Report-45312 [Accessed 20 Apr. 2018].
Alshahrani, M.S.A. and Alsadiq, M.A.J., 2014. Economic growth and government spending in
Saudi Arabia: An empirical investigation. International Monetary Fund.
Gupta, S., Ylaoutinen, S., Olden, B., van Eden, H., Curristine, T., Josephs, T., Pedastsaar, E. and
Seiwald, J., 2016. Budget institutions in low-income countries. OECD Journal on
Budgeting, 15(3), pp.9-25.
Algarni, N.A., Patrick, M., Ahmed, A.A. and Hamad, R., 2018. Identifying Factors Influencing the
Leadership Performance of Saudi's Healthcare Sector.
Schiavo-Campo, S., 2017. Government budgeting and expenditure management: principles and
international practice. Taylor & Francis.
Wilson, P.W. and Graham, D.F., 2016. Saudi Arabia: The Coming Storm: The Coming Storm.
Routledge.
Malik, A., 2016, August. The Political Economy of Macroeconomic Policy in Arab Resource-Rich
Economies. In Economic Research Forum Working Papers (No. 1034).
Joharji, G. and Willoughby, J., 2014. The Saudi Arabian budgeting system: an institutional
assessment. Public Administration and Development, 34(1), pp.63-80.