By Dmitry Zhdannikov

DAVOS, Reuters – Saudi Arabia’s financial minister stated that its policy of fiscal sustainability will ensure that reserves are not below a percentage point of the country’s gross domestic products.

World’s largest crude oil exporter with a $1 trillion economy, stated in the budget for 2022, that Fiscal Sustainability Programme seeks to reduce the impact of fluctuations in oil prices on the economy, and achieve several economic benefits for non-oil economies.

“We are in the final stages of developing our fiscal sustainability policies,” Mohammed al-Jadaan (Minister of Finance) told Reuters while attending the World Economic Forum at Davos.

The policy states that our reserves must not fall below a specific percentage of GDP. This figure would reach the double digits.

Jadaan stated that excess funds can be used to fund the Public Investment Fund, the $600 billion national sovereign wealth fund and the National Development Fund.

He stated, “In five years, the government has spent one trillion riyals on reserves. We are still replenishing these funds.”

The government sold some assets in order to pay the massive budget deficit and lowered foreign reserves from $737 billion to $529 billion in August 2014.

At March’s end, the net foreign assets of Saudi Central Bank stood at 1.63 trillion Rial ($434.57 Billion).

According to budget documents, the Saudi central bank’s government reserves were expected to reach 350 billion riyals by the end 2021.

Jadaan claimed that Saudi Arabia will eventually consider lowering the rate for value-added tax, which has been increased from 15% to 15% since 2020. As the pandemic struck global demand, the VAT rate had to be tripled in order to support financial resources.

After the Russia-Ukraine war, oil prices reached $100/barrel this year. Saudi Arabia has a budget surplus of $15.33 Billion in its first three months 2022.($1 = 3.7508 riyals)