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Saudi Arabia aims for transparency with quarterly budget update

Saudi Arabia said Tuesday that it will issue a quarterly budget progress report for the first time as part of efforts to boost transparency while diversifying its oil-dependent economy.

The world’s biggest oil exporter is wooing investors as it tries to reduce budget deficits caused by a collapse in energy revenues.

“We will for the first time in Saudi announce, possibly in a couple of weeks or less, the first quarterly results of the budget,” Finance Minister Mohammed al-Jadaan told the Euromoney Saudi Arabia Conference.

Under its Vision 2030 plan released last year, the kingdom aims to develop its industrial, investment and small-medium business base to employ more Saudis and reduce its reliance on oil revenue.

“The government made a clear commitment that they will increase the level of transparency,” al-Jaadan said.

“They will submit to international laws on transparency” and respond to the needs of the private sector which requires timely data to make investment decisions, he added.

The Vision 2030 plan coincided with a plunge in global oil prices that began in 2014 and left Saudi Arabia with a budget deficit for this year initially projected at $53 billion (48.5 billion euros).

In September authorities froze salaries and limited benefits for civil servants – who comprise the bulk of the workforce – as part of austerity measures.

But last month King Salman restored those benefits.

Minister of State Mohammed al-Shaikh later explained that the move coincided with “the substantially better-than-expected budgetary performance” in the first quarter after the government took measures to cope with its budget deficit.

These included cuts in subsidies and delays in major projects.

In October Saudi Arabia raised $17.5 billion in its first international bond offering.

The kingdom is also preparing to sell less than five-percent of energy giant Aramco next year. In April it cut taxes on oil companies in a major move that could attract investors.

Saudi Arabia’s stock exchange, Tadawul, has opened to foreign investors and in February began an alternative trading platform, Nomu, to boost small and medium firms.

Two more companies have been approved for offerings on Nomu in addition to the seven that already trade, Mohammed El-Kuwaiz, Vice Chairman of the Capital Market Authority, told the same conference.

“The first day of trading on the Nomu market was larger than most of the main markets in our GCC countries, which gives you an indication of the pent-up demand,” he said, referring to the six member states of the Gulf Cooperation Council.

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