Q2 performance report reflects effectiveness of financial and structural reforms
RIYADH — Finance Minister Mohammed Al-Jadaan said that the results of the half year performance of the government reflects the effectiveness of the financial and structural reforms while also emphasizing the progress in executing development projects in lines with the Saudi Vision 2030.
Al-Jadaan was speaking after the Ministry of Finance released the Q2 2019 Budget Performance Report here on Tuesday. The report revealed that the budget deficit during the first half of 2019 amounted to SR5.7 billion, compared to SR41.7 billion in the corresponding period of the previous year. Total revenues increased by 15% while total expenses increased by 6%.
The minister of finance explained that the results of the first half of the year confirm the effectiveness of the financial and structural reforms implemented by the government, including diversification of government revenue sources through the implementation of initiatives aimed at increasing non-oil revenues.
The results also indicated that reforms of the development of public financial management to raise the efficiency and effectiveness of spending, which recently included the approval of the Government Procurement Law while reflecting the progress in executing development projects according to the Saudi Vision 2030.
Al-Jadaan stated that the government is in the process of achieving a balance between financial discipline and raising efficiency to realize the financial targets for this year by controlling the deficit rates in the budget and public debt, while implementing projects, programs and initiatives aimed at raising the rates of economic growth and the well-being of the citizens.
The minister clarified that the report is a confirmation of the government’s commitment to transparency and financial disclosure, and strengthening the governance and control of public finances, to achieve the Financial Balance Program’s objectives.
The results of the financial performance for the first half of 2019 showed an increase in non-oil revenues by 14.4 % resulting from improvement in economic activity and implementation of the reform initiatives.
Tax revenues on goods and services increased by 48 % as a result of the increase in the revenues generated from VAT and the Expat fees. Trade and international transactions increased by 10 % as the economic activity improved.
At the same time, oil revenues increased by 15 % compared to the same period last year, driven by the amounts received from oil revenues.
On the expenditures side, social benefits and employees’ compensation increased by 3 % each, compared to the same period last year. Subsidies were more than doubled as a result of the implementation of the private sector stimulus plan, led by the Consolidated Bill of Support for Small and Medium Enterprises.
The period witnessed a continued increase of spending on social protection programs such as Citizens’ Accounts, social security, cost-of-living allowance and student bonuses. Spending on health, social development and municipal services increased by 13 % and 22 %, respectively.
At the same time, capital expenditure increased by 22 % with the progress in the implementation of housing projects and other development projects.
The internal and external borrowing during the first half of the year amounted to about SR 67.9 billion, which will be used to finance part of the expected deficit until the end of the year. The Debt Balance as at the end of June 2019 amounted to SR 627.8 billion.
As for the results of 2019 2Q, revenues amounted to about SR260.706 billion, and the expenditures amounted to nearly SR294.226 billion. The budget deficit during the 2Q was about SR 33.52 billion.