The document discusses Saudi Arabia's fiscal policy and role in finance and investment. It notes Saudi Arabia's stable political system, predictable economic policies, and well-supervised financial sector provide an attractive business environment. It also discusses Saudi Arabia's systemic role in ensuring global energy market stability and framing sustainable global growth policies. Government spending focuses on infrastructure, human capital, and health. Fiscal policy aims to promote non-oil growth through various financing institutions that support private sector development.

1. Finance and Investment in Saudi
Arabia: The Role of Fiscal Policy
1
AHMED A. ALKHOLIFEY
EXECUTIVE DIRECTOR FOR SAUDI ARABIA AT THE
INTERNATIONAL MONETARY FUND

2. Stability
2
 Stable Political System.
 Predictable Economic Policies:
 Consistent, credible, and clear policy messages.
 Well-Supervised Financial Sector:
 Well capitalized and highly profitable banking sector.
 Attractive Business Environment.

3. Global Role
3
 Systemic Role of Saudi Arabia:
 Positive spillover effects of policies pursued by Saudi Arabia
2005-2009 2009 2010
Imports (% of GDP) 20.0 23.0 21.6
Remittances (bln. SR) 340.7 94.4 98.2
 Ensuring sustainable supply and stability of energy markets.
 The G20:
 Framing the new path for strong, sustainable, and balanced
growth.

4. Growth
4
 Real GDP*
2009 2010 2011
Saudi Arabia 0.1 4.1 6.5
World Output -0.7 5.1 4.0
Advanced Economies -3.7 3.1 1.6
Emerging and
2.8 7.3 6.4
Developing Economies
*IMF World Economic Outlook, Oct 2011
 Non-Oil GDP
2005-2009 2010 2011
Saudi Arabia 4.6 4.9 5.4
GCC 3.6 4.5 5.3

5. 5
Government Hydrocarbon Revenue and Total
Expenditure, 1980–2010
(In U.S. dollar billions)
Fiscal Policy
Hydrocarbon Revenue
Consistent & countercyclical
Government Expenditure
Priorities:
Investment in infrastructure.
Investment in human capital
Competitiveness:
Enhancing productivity of
physical and human capital

6. Government Spending
6
2011 Appropriations* for the main Government expenditures (Billion SR)
development sectors
Specialized
Credit
Institutions 580*
13%
Water, Agr
Education
iculture, an
and
d
Training
Infrastructure
41% 346
14%
Transport
& Telecom
7%
Health and
social
Affairs
19%
Municipalities
6%
*Projections *Projections

7. Promotion of Finance
7
•finances large scale government and
Total loans and share of SCIs
PIF (1971): private projects during 2006-2010
117.5 (bil SR)
REDF (1974): •finances real estate sector
SIDF (1974): •finances industrial projects
•provides interest-free loans for small
SCB (1971): and emerging businesses and 37.8%
professions
18.7%
•finances farmers and agricultural 19.9% 20.9%
ADF (1962): projects 2.2%
Direct Loan •Extends credit to private sector entities
Program for the purposes of establishing ADF
SCB
PIF
(1971): development projects. (SR 7.0 Billion) SIDF
REDF
yr total

8. Conclusion
8
 Attractive business environment:
 Promising growth potentials
 Low tax rate (max. 20%) and business friendly tax
administration.
 Large economic size
 Supportive economic policy including good finance terms