The Fiscal Balance Program, launched in December 2016, for 2017 to 2020 is another government initiative for Vision 2030 and aims to sustain the status of public finances and achieve a balanced budget through five key pillars:
- Rationalizing Government Expenditures
- Energy and Water Price Reform
- Other Government Revenues
- Household Allowance
- Enabling Private Sector Growth
In this article, we will focus on pillar five; how the program affects the private sector.
The ambitious private sector goals set by the government will be achieved through the following methods:
- Laying the foundations of financial accountability in all government entities by allocating a budget consistent with the strategic priorities of these entities, and establishing a system promoting accountability and full ownership of financial targets across all entities
- Fiscal and macroeconomic planning directing the fiscal policy towards achieving fiscal and economic sustainability and enabling efficient decision-making process for budget management while providing an integrated picture of debts and reserves
- Maximizing government revenues by creating a portfolio of revenue initiatives necessary to achieve the fiscal balance objectives
- Improving government spending efficiency through optimal utilization of state resources
Support struggling companies
The program will support struggling private sector companies by providing liquidity and equity financing. Operations, such as assessment and provision of financial support, will be outsourced to the private sector, such as banks and funds, but the approval of the targeted assessment and support will be managed by the government owners’ supervisory committee. Support offered will be debt financing to private sector, equity financing to private sector, consultation and advisory, as well as guarantee of private sector investment internal rate of return (IRR).
Private sector feedback platform
This platform will create a place for private sector companies to provide continuous communication and increase their ability to give valuable information.
Private Sector Labs
The Private Sector Labs is an annual face-to-face platform for engagement between government and the private sector. This will increase their visibility in development and initiatives as they increase.
The private sector is an essential part of Saudi’s economy and the Vision 2030 plans. Improving communication between government and private sectors has lead to stronger benefits offered to private sector companies and therefore encouraging higher compliance. The closer the Saudi economy comes to reaching their objectives, the more effective the transformation becomes and the greater growth we can see in the private sector.