Saudi Gov’t Told Not to Boost Spending

The International Monetary Fund urged the Saudi government not to boost spending in line with climbing oil prices. Tim Callen, head of an IMF team which held talks with Saudi officials over 12 days this month, said in a statement late on Tuesday that he predicts economic growth would start picking up this year, after gross domestic product shrank last year for the first time since 2009, Reuters reported. “The government remains committed to wide-ranging economic and social reforms to transform the economy away from its traditional reliance on oil and to create a more dynamic private sector that creates jobs for the growing working-age population.” As recently as last year, the IMF warned Riyadh not to slash its budget deficit too rapidly for fear of damaging the economy. This helped to convince authorities at the end of last year to push back the date for balancing the budget to 2023 from 2020. However, Callen struck a very different note, saying authorities should “resist the temptation to re-expand government spending in line with higher oil prices”.