admin“Overall growth is expected at 4,4 percent. . . because oil output is likely to be lower than its average level in 2012 and the growth rate of government spending looks set to slow,” said the IMF.
Following talks with Saudi Arabia, an IMF mission said it was right time for the kingdom to undergo fiscal reforms, to hike fuel prices to reduce consumption and to take precautionary measures to contain inflation.
Inflation has picked up since mid-2012 due to higher food prices and cost increases for restaurants, hotels and transportation, but remains contained at 4,0 percent, the IMF said.
“The fiscal position is very strong. In recent years, the government has run large budget surpluses, reduced debt to very low levels, and built up considerable financial assets,” it said in a statement.
“Budget management has been considerably strengthened. From this position of strength, now is a good time to consider further fiscal reforms. In this context, we encourage the government to further develop fiscal tools, including those dealing with oil price uncertainty.”
The IMF said a drop in oil output and lower crude prices would likely result in smaller fiscal and current account surpluses in 2013, but “they will remain substantial”.
Saudi Arabia posted massive budget surpluses of US$81 billion and US$103 billion in 2011 and 2012, respectively, and is projected to post a huge surplus this year also.
Last year, the Opec kingpin used part of the surplus to pay public debt which dropped to US$26,4 billion by the end of 2012 from US$36,1 billion in the previous year.
The IMF advised Riyadh to gradually raise energy prices to cut consumption which has been rising rapidly due to a growing population. — AFP.
Online Reporter