The International Monetary Fund (IMF) recently issued a favorable report on Saudi Arabia, following the Article IV consultations. The report highlighted that Saudi Arabia’s financial and regulatory reforms have accelerated economic growth, controlled inflation, and reduced unemployment to historic lows. The IMF praised the country’s efforts to diversify its economy under the Saudi Vision 2030 initiative.
The report commended Saudi Arabia’s macroeconomic policies and transformational changes, which have boosted non-oil activities and increased employment rates. Notably, women’s participation in the labor market has risen to over 35%, surpassing the Vision 2030 target of 30%.
The IMF acknowledged Saudi Arabia’s long-term financial planning, which supports Vision 2030 projects while mitigating overheating risks. The Kingdom’s strong fiscal space and low sovereign debt risks, along with substantial financial reserves, were also noted as buffers against global and regional challenges.
Ongoing reforms in Saudi Arabia, such as enhancing regulations, streamlining fees, and improving governance, have stimulated private sector growth and attracted foreign direct investment. Significant progress in digital transformation and artificial intelligence was also highlighted.
The IMF Executive Directors praised Saudi Arabia’s leadership in international forums, including its chairmanship of the International Monetary and Financial Committee (IMFC). The report also noted an increase in service sector activities, particularly in transportation, trade, tourism, and finance, alongside a 5.7% growth in consumption.
Foreign investment license applications reached record levels in 2023, with 330 companies seeking to establish regional headquarters in Saudi Arabia. The banking sector was reported to have strong solvency, liquidity, and resilience, with notable efficiency in profitability, infrastructure, and competitiveness.
The Saudi Stock Exchange (Tadawul) index rose by 14.2% in 2023, outperforming the Morgan Stanley Emerging Markets Index. The IMF highlighted the contribution of three newly licensed digital banks to financial inclusion and competitiveness.
The report also mentioned Saudi Arabia’s effective risk management in real estate lending and improvements in anti-money laundering and terrorist financing measures. Non-oil revenues have increased, reflecting the success of ongoing reforms and alignment with international best practices in customs procedures.
The IMF projected a 3.5% growth in the non-oil sector for 2024, driven by strong domestic demand, and anticipated stable inflation at around 2% due to the Saudi Riyal’s peg to the US dollar and supportive local policies.
Saudi Arabia’s environmental reforms have led to one of the lowest carbon intensity levels among major producers. The Kingdom aims to achieve net zero carbon emissions by 2060 and has secured a 30-year purchase agreement for the NEOM green hydrogen project. Plans to build a significant carbon capture and storage plant by 2027 to sequester 9 million tons of carbon dioxide annually were also noted.