Bloom Investments: The 2021 budget is flexible to absorb any emergency spending

Blum Investments revealed that the Saudi budget for 2021 is flexible to accommodate any additional emergency spending required in the event of a second wave of the Coronavirus pandemic, or if the recovery in oil demand slows.

She added, the financial spending of the Kingdom of Saudi Arabia, along with the monetary measures, provided a strong support for the economy, which can be seen from the rise in PMI levels for November. This provides additional relief for the government to pursue a more expansionary fiscal budget while curbing the deficit as a percentage of GDP.

According to “Bloom Investments”, the Public Investment Fund is expected to close the gap in financial spending and thus provide vital support to the economy while preserving public finances, noting that reserves have decreased to their lowest level since 2014. It is expected to stabilize by 2022-2023 . She indicated the announcement of the state’s general budget, and government spending will be 990 billion riyals in the 2021 fiscal year.

Revenue of 849 billion riyals is expected to be driven by value-added tax, and the recovery of oil prices will lead to a significant reduction in the budget deficit on an annual basis at 141 billion riyals (approximately 4.9% of GDP, compared to 289 billion riyals estimated for 2020 (12.0) It added that allocations to budget expenditures are still high towards education (18.8%), health and social development (17.7% and the military sector (17.7%). At the same time, spending was moderate in the budget mainly in economic and structural resources. Infrastructure and transportation for the fiscal year 2021.

She added that although spending in the public budget is expected to witness higher over the next few years, it will be crucial to see effective investments by the sovereign wealth fund, to bridge the spending gap. At the same time however, the 2021 budget is set to be more expansionary in nature.

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