Budget deficit projected to fall 51%

 The deficit in the General Budget for the year 2021 will fall sharply by 51.34 percent, reaching SR145 billion compared to the projected deficit of SR298 billion; in the budget of the current year 2020.

According to the preparatory statement of the budget for the year 2021, issued by the Ministry of Finance on Wednesday; the deficit is in the way to reach 5.1 percent of the gross domestic product (GDP). The total expenditure will reach SR990 billion, while the revenues will post an increase of 9.87 percent reaching SR846 billion as compared to that of the year 2020.

The statement indicated that the initiatives taken; such as the introduction of expatriate fee and increasing the value-added tax (VAT) rate to 15 percent would continue. According to the ministry projections; public debt shall reach SR941 billion; representing 32.9 percent of the GDP.

The ministry announced that the public debt strategy aims to diversify financing tools between issuing bonds and sukuk, and to continue researching new markets and financing methodologies through alternative government financing. This have to continue; and complete major development project; and thus contributing to increasing private sector participation by providing the necessary financing for priority sectors.

Expat fee, VAT

In detail the ministry indicated that the initiatives; that appeared in the past would continue; in order to remain in place such as the financial compensation for expatriates (expat fee); the continuation of the gradual correction of energy prices until reaching reference prices and ensuring the sustainability of non-oil revenues; in order to confront the coronavirus pandemic such as raising VAT rate to 15 percent and an increase in customs duties for some goods.

The ministry expects that the total revenues would reach SR846 billion; it is expected that growth will continue by increasing revenues to reach SR928 billion in 2023; with an average annual increase of 6.4 percent.