On 26 October 2016 the IMF Managing Director discussed the economic outlook and policy priorities with Saudi Arabia and other GCC countries.
A statement issued following the meetings noted that Saudi Arabia has begun a policy shift to adjust to low oil prices through Vision 2030 and the National Transformation Program. These programs include reforms to reduce reliance on oil, strengthen non-oil growth and increase employment. The Managing Director noted that the reforms need to be sequenced and prioritized in a way that reduces bottlenecks in implementation and allows businesses and individuals enough time to adjust.
The Saudi government has begun the fiscal adjustment by containing expenditure and raising additional revenues. In the medium term reforms should continue with increased energy prices and further revenue-raising measures. These should include the planned introduction of excises and value added tax (VAT) at the level of the Gulf Cooperation Council (GCC) and further spending restraint.
In the case of the GCC countries continued fiscal adjustment is needed in the medium term. Measures to reduce the deficit should be phased in gradually while medium term fiscal frameworks should be strengthened. Policies should continue to promote growth and employment.
