Latest news with #fiscalreforms
Zawya
28-07-2025
- Business
- Zawya
Fitch affirms Saudi Arabia's A+ credit rating with stable outlook
RIYADH — Fitch Ratings has affirmed Saudi Arabia's long-term foreign currency issuer default rating at A+ with a stable outlook, highlighting the Kingdom's strong fiscal position and continued reform momentum. In its latest report, the international rating agency said Saudi Arabia's credit rating reflects the robustness of its financial fundamentals. It noted that key indicators —such as the sovereign net foreign asset position and the debt-to-GDP ratio— are significantly stronger than the averages for countries in the "A" and even "AA" rating categories. Fitch emphasized that the Kingdom holds substantial financial reserves in the form of public sector deposits and other assets, supporting its macroeconomic stability. Looking ahead, the agency projected that Saudi Arabia's sovereign net foreign assets will remain a cornerstone of its credit strength, reaching 35.3% of GDP by 2027. This figure stands well above the average for countries rated 'A,' which is just 3.1% of GDP. Fitch also pointed to the ongoing fiscal reforms undertaken by the Saudi government, aimed at improving budget flexibility and reducing dependence on oil revenues. The agency said these reforms, along with a sustained rise in non-oil revenues, continue to reinforce the Kingdom's credit profile. © Copyright 2022 The Saudi Gazette. All Rights Reserved. Provided by SyndiGate Media Inc. (
Argaam
26-07-2025
- Business
- Argaam
Fitch affirms Saudi Arabia's credit rating at 'A+'; outlook Stable
Fitch Ratings affirmed Saudi Arabia's long-term foreign-currency Issuer Default Rating (IDR) at 'A+' with Stable outlook. The rating reflects the Kingdom's strong fiscal and external balance sheets, with government debt/GDP and sovereign net foreign assets (SNFA) considerably stronger than both the 'A' and 'AA' medians, and significant fiscal buffers in the form of deposits and other public sector assets. In its report, Fitch expected the Kingdom's sovereign net foreign assets (SNFA) to remain a key credit strength at (35.3%) of GDP in 2027, which is larger than relative to 'A' median (3.1% of GDP), supported by prudent fiscal management and stable external positions. The fiscal reforms that increase the budget's resilience to oil price volatility and a continuation of economic reform that supports strong growth of the non-oil economy, could have a positive impact on the rating, Fitch added.
Arab News
05-07-2025
- Business
- Arab News
2024: A year of fiscal discipline, economic growth
Saudi Arabia has released its 2024 fiscal results, highlighting how structural and fiscal reforms have strengthened economic resilience and improved the ability to navigate global challenges. These reforms have driven robust, non-oil sector growth, reduced unemployment to record lows, and kept inflation below global averages. The government remains committed to advancing fiscal policies that reinforce economic stability and ensure long-term sustainability. These measures have supported the Kingdom's development agenda while maintaining fiscal discipline, stimulating growth and preserving healthy public reserves and debt levels. In 2024, total revenues exceeded the approved budget by about 7.4 percent, thanks to stronger-than-expected oil and non-oil performance. Higher oil revenues were driven by performance-linked dividends, while non-oil revenues rose 14.1 percent over the budget, reflecting the expansion of non-oil activities and continued efforts to strengthen non-oil revenue streams. Total expenditure rose by about 9.9 percent over the approved budget, reflecting significant progress toward Vision 2030 goals and the execution of key projects. This increase was also driven by advancing some expenditure originally planned for future years, raising both operational and capital spending. The higher spending supported efforts to sustain and enhance social programs, mitigating the impact of economic changes on targeted beneficiaries. Additional measures focused on improving public service quality, enhancing quality of life, empowering the private sector and creating a more attractive investment climate. The actual fiscal deficit for 2024 was around SR116 billion ($31 billion), or 2.5 percent of gross domestic product, exceeding the approved deficit of SR79 billion (1.9 percent of GDP). By the end of 2024, public debt rose to nearly SR1.2 trillion, about 26.2 percent of GDP, up from SR1.1 trillion a year earlier. Government reserves stood at roughly SR390 billion. The General Authority for Statistics reported a decline in real GDP growth for 2024 compared to the budgeted forecast of 4.4 percent, mainly due to a 4.4 percent drop in oil sector activity. This reflects the Kingdom's voluntary production cuts under the OPEC+ framework and its commitment to energy market stability. Despite the decline in the oil sector, non-oil sectors outperformed projections, growing by 5.2 percent and driving overall real GDP growth of about 2 percent. This was supported by ongoing economic diversification and structural reforms that boosted activity. In 2024, the Kingdom recorded an inflation rate of 1.7 percent, well below the global average and the budgeted estimate of 2.2 percent. These results underscore the government's strong commitment to Vision 2030 through responsible fiscal policy, targeted investments and broad economic reforms. Despite a challenging global environment — marked by oil market volatility, inflationary pressures, and geopolitical uncertainty — the Saudi economy showed resilience, adaptability, and steady progress toward diversification. Structural and fiscal reforms enabled the government to navigate 2024's challenges, driving strong growth in non-oil activities. These reforms also lowered unemployment to a historic 7 percent in 2024 and kept inflation well below global trends. The government remains committed to forward-looking fiscal policies that support economic stability and ensure long-term sustainability. Maintaining low inflation, boosting non-oil revenues, and expanding non-oil activity have helped mitigate risks from declining oil revenues and price volatility. These achievements highlight the effectiveness of the reform agenda and the Kingdom's commitment to a diversified, sustainable economic future. With public debt at sustainable levels and reserves healthy, the Kingdom is well-positioned to advance its transformative agenda. Looking ahead, Saudi Arabia reaffirms its commitment to enhancing competitiveness, improving citizens' quality of life, empowering the private sector, and building a vibrant, inclusive economy. Through fiscal discipline, innovation, and strategic investment, the Kingdom aims to strengthen the foundations of long-term sustainability and prosperity — balancing growth with fiscal prudence under its expansionary spending policies. • Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
Free Malaysia Today
18-06-2025
- Business
- Free Malaysia Today
Fiscal reforms will boost social protection funding, says economist
The Sumbangan Asas Rahmah (SARA) programme is one of several government initiatives aimed at easing the burden on vulnerable groups. PETALING JAYA : Fiscal reforms, including the expansion of the sales and service tax (SST), will boost social spending and allow Putrajaya to deliver targeted aid to a wider population, says an economist. Madeline Berma, a senior fellow at Institut Masa Depan Malaysia, said the country would struggle to strengthen its social safety nets without the additional revenue. Malaysia is among the lowest tax-revenue collectors in Southeast Asia. Madeline said Malaysia's tax-to-gross domestic product (GDP) ratio stood at just 12.5% last year, well below the Organisation for Economic Co-operation and Development's average of 34.1%. Madeline Berma. 'Malaysia's inadequate social protection stems from several factors, including low tax revenue and income inequality. 'In terms of social spending as a percentage of GDP, Malaysia lags behind both high- and upper-middle-income countries,' she told FMT. 'Fiscal reforms – including increasing tax revenue – are vital to creating enough fiscal space to boost social spending and deliver more targeted assistance.' Madeline said the SST expansion, which kicks in on July 1, is projected to increase tax revenue by more than RM5 billion. She said this will allow Putrajaya to channel additional funds to direct cash assistance programmes, such as Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA). She also said the higher tax revenue could be used to finance improvements to infrastructure and public services, which would in turn raise productivity levels and help narrow the gap between the rich and poor. Such fiscal reforms, she added, could help resolve two major shortcomings in Malaysia's social protection system – insufficient coverage and inadequate benefits. 'This is especially relevant for informal workers and in addressing gaps in retirement, health and injury coverage,' she said. Treasury secretary-general Johan Mahmood Merican previously said the expansion of the SST was necessary to strengthen Malaysia's fiscal position by increasing revenue for better social protection – without burdening the majority of the population. He said the move was expected to benefit 5.4 million lower and middle-income Malaysians. On June 9, the finance ministry announced that essential goods would remain tax-exempt, while a 5% to 10% SST would apply to non-essential items such as king crab, salmon, truffle mushrooms and imported fruits. The scope of the service tax will also be widened to include rentals, leasing, construction, financial services, private healthcare and private education. However, public healthcare for Malaysians will remain SST-exempt. Addressing the potential impact of the expanded SST, Madeline acknowledged that some companies may pass on the increase in costs to consumers. However, she expects the impact to be minimal, since essential goods are not affected. Expand post-retirement protection Barjoyai Bardai. Meanwhile, economist Barjoyai Bardai proposed that workers who have contributed to the Social Security Organisation (PERKESO) for more than two years be eligible for protection after retirement, as part of a comprehensive long-term social protection plan. The academic at the Malaysian University of Science and Technology called for such contributors to be given a pension equivalent to half of their last drawn salary. He also suggested making contributions mandatory for micro, small and medium enterprise owners and self-employed individuals – including farmers, fishers and service providers – under a takaful scheme, to ensure effective protection.
Arab News
10-06-2025
- Business
- Arab News
Pakistan to unveil national budget today as it eyes sustainable growth
ISLAMABAD: Pakistan's coalition government will unveil the national federal budget today, Tuesday, for the fiscal year till June 2026 with Islamabad eyeing sustainable economic growth and vowing to continue ahead with painful fiscal reforms to ensure that. The budget comes a day after the government unveiled the annual Economic Survey, a pre-budget document assessing the economy's trajectory over the past year, which said Pakistan's economy is expected to grow 2.7 percent in the outgoing fiscal year, missing Islamabad's 3.7 percent target. The budget every year highlights the government's plans to raise revenue, outlines its expenditures, states inflation and growth assumptions as well as allocations for several areas such as defense, education, health and other sectors of the economy. 'The Federal Budget for the next fiscal year will be presented in the National Assembly on Tuesday,' state broadcaster Radio Pakistan reported, adding that the lower house of parliament will meet at 5:00 p.m. for the session. 'Finance Minister Muhammad Aurangzeb will present the Federal Budget in the National Assembly and later he will lay a copy of the Finance Bill, 2025, containing the Annual Budget Statement before the Senate.' The budget comes as Pakistan undertakes efforts to navigate a tricky path to economic recovery. The South Asian country, which came to the brink of a sovereign default in June 2023, has since then undertaken painful macroeconomic reforms that it credits for gains such as a low inflation rate, increasing investors' confidence in the stock market and current account surpluses. Pakistan has vowed to stay the course of long-term reforms, which include widening the tax net, taking steps to privatize loss-making state-owned assets, slashing subsidies and undertaking reforms in energy and other vital sectors. An International Monetary Fund (IMF) team concluded its visit to Pakistan last month after discussions with authorities regarding the budget, broader economic policy and reforms under its ongoing $7 billion loan program for the country. The IMF last month approved the first review of Pakistan's loan program, unlocking a $1 billion payment. A fresh $1.4 billion loan was also approved under the IMF's climate resilience fund. The IMF's loan is vital for Pakistan which is trying to revive its debt-ridden economy. In a televised news briefing on Monday afternoon while releasing the Economic Survey, Aurangzeb reaffirmed the government's commitment to implementing IMF-backed structural reforms to transform the fundamentals of Pakistan's economy. 'The DNA of Pakistan's economy has to be fundamentally changed through tax and energy reforms that have started showing remarkable results,' he said. According to the survey, Pakistan's revenues rose sharply over the past year. It said tax collections increased by 26.3 percent to Rs9.3 trillion ($32.9 billion), while total revenues stood at Rs13.4 trillion ($47.5 billion). The primary surplus also improved to 3.0 percent from 1.5 percent. Government expenditure during this period rose to Rs16.3 trillion ($58 billion), with current and development spending increasing by 18.3 percent and 33 percent, respectively. On the external front, Pakistan recorded a sharp turnaround in its current account, moving from a $1.3 billion deficit to a $1.9 billion surplus, driven by improved exports and record remittance inflows.
