June 29, 2017

Abstract

June 29, 2017

Contents

June 29, 2017

Approved By

Aasim M. Husain

Prepared By Ryadh Alkhareif (OEDSA), Moayad Al Rasasi (SAMA), Nabil Ben Ltaifa, and Sohaib Shahid, with input from Saad A. Alshahrani (Ministry of Finance) and support from Meghan Greene, Diana Kargbo-Sical and Zhe Liu

Contents

  • FISCAL ADJUSTMENT—SCOPE AND PACE

  • A. Introduction

  • B. Fiscal Space Analysis

  • C. Fiscal Anchors for Resource Rich Countries

  • D. Conclusions

  • References

  • BOX

  • 1. Fiscal Adjustment Experience in the 1980s and 1990s

  • FIGURES

  • 1. Evolution in Government Spending (2004–16)

  • 2. International Bond Yields

  • 3. Baseline, Fiscal Expansionary, and Oil Price Shock Scenarios

  • 4. Structural Balance Estimates

  • 5. Projected and Sustainable Non-oil Primary Deficit

  • TABLES

  • 1. Initial Macroeconomic Conditions

  • 2. Initial Structural Conditions

  • 3. Financing Sources and Availability

  • 4. Debt Dynamics

  • 5. Fiscal Space Under Expansionary Fiscal Scenario

  • 6. Overall, Non-oil, and Structural Fiscal Balances

Contents

  • WHY HAS INFLATION DECLINED IN SAUDI ARABIA?

  • A. Introduction

  • B. Inflation in Saudi Arabia

  • C. Estimating the Determinants of Inflation

  • D. Results

  • E. Conclusions

  • References

  • FIGURES

  • 1. Recent Inflation Developments

  • 2. Drivers of Inflation in Saudi Arabia

  • 3. Historical Fit Between Actual and Model Predicted Inflation

  • TABLE

  • 1. Vector Error Correction Estimates: Determinants of Inflation

  • APPENDICES

  • I. Literature Table

  • II. Measuring the Output Gap

  • III. Determinants of Core Inflation

  • APPENDIX TABLES

  • 1. Various Methods Were Employed to Calculate Potential GDP

  • 2. Vector Error Correction Estimates: Determinants of Core Inflation

Saudi Arabia: Selected Issues
Author: International Monetary Fund. Middle East and Central Asia Dept.