Increasing competition, encouraging financial sector reform and driving financial sustainability are key issues for the continued development of the Kingdom of Saudi Arabia, according to senior policy makers who spoke at the Euromoney Saudi Arabia conference in Riyadh.
The move towards greater competitiveness was a key issue highlighted by speakers. The continued growth of the economy, against a backdrop of global economic crisis, has been driven primarily by government spending, which as a percentage of gross domestic product (GDP) has risen from 29% in 2006 to 36% in 2012, even as GDP has expanded dramatically.
However, policymakers are increasingly recognising the limits of driving growth through government spending alone. Conference speakers said that introducing reforms to encourage greater private sector investment, as well as creating wider choice in the market, were top priorities for the Kingdom.
“Saudi Arabia has acted to create a favourable environment for sustainable and competitive finance, by strengthening the Kingdom’s economic stability in recent years and continuing to use surplus budget revenues to strength its reserves and lower the public debt, which has now reached 3.6% of GDP,” said the finance minister, Dr Ibrahim Al-Assaf. “This, in turn, has helped to accelerate the pace of investment in infrastructure and strengthen our development goals.”
Also discussed was the need for the development of debt markets in Saudi Arabia, in spite of the strength of the economy and the on-going fiscal surplus. Several speakers suggested that liquid and efficient debt markets would support financial sustainability and the development of the non-oil economy.
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