Recent economic reforms in Saudi Arabia to curb the budget deficit in the wake of tanking oil prices are a positive step according to Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department. But more needs to be done to develop the kingdom’s non-oil sector, and government spending cutbacks risk depressing growth in these sectors.
Speaking to the Saudi daily Asharq al-Awsat Mr Ahmad commended the Saudi government for taking measures to reduce government spending in 2015, lowering the budget deficit to 16% of GDP, well below the IMF’s projected 20% (MEES, 8 January). He also notes that for the 2016 budget the kingdom is maintaining a tight grip on spending which could help to cut the deficit further. These measures can help “maintain monetary flexibility at a time of falling oil prices,” he said. (CONTINUED - 744 WORDS)