The International Monetary Fund (IMF) has recommended that Saudi Arabia move forward with increasing gasoline prices and other fuel types, as well as accelerating the lifting of electricity prices.
Following the 2023 Article IV consultations, the IMF suggested a set of recommendations to Saudi Arabia, which included expanding social programs alongside the gradual elimination of energy subsidies, persisting with the Government Expenditure & Projects Efficiency Authority’s efforts, and further optimizing the public sector payroll.
Read more: IMF: Saudi Arabia to grow at fastest pace in a decade
Additionally, the IMF recommended keeping the value-added tax at a minimum of 15% and moving forward with increasing the maximum limit for gasoline prices, while accelerating the lifting of electricity prices and other fuel types.
According to the IMF mission, the average non-oil growth momentum in Saudi Arabia is projected to remain robust at 5% in 2023. Additionally, the mission observed that the inflation rate in the Kingdom will stay at 2.8% in 2023, courtesy of the currency’s strength, support subsidies, and the maximum gasoline prices.
The IMF pointed out that the Saudi central bank’s intervention twice eased liquidity pressure last year and restored the differences between the SAIBOR (the Saudi Arabian Interbank Offered Rate) and the LIBOR (or SOFR, the Secured Overnight Financing Rate) to their historical averages.
Moreover, the IMF welcomed the Saudi government’s efforts to separate spending from oil price fluctuations “by establishing a fiscal rule and enforcing it rigorously.”
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