Saudi economy is ‘resilient’ and won’t be impacted by attacks: Finance Minister

Saudi Arabia’s economy is “resilient and strong,” and will not be impacted by Saturday’s attacks on its oil facilities, the Kingdom’s Minister of Finance Mohammed al-Jadaan said on Wednesday.

“The Kingdom’s Vision 2030 economic reform plan is still ongoing, and our revenues will not be impacted by this attack,” al-Jadaan told Al Arabiya.

When asked if there will be an increase in value-added tax (VAT) in the Kingdom during 2020, the minister said, “I don’t expect there will be so.”

Earlier this month, the IMF had suggested in a report that Saudi Arabia should consider raising VAT from five to 10 percent, in consultation with the Gulf Cooperation Council (GCC).

The report also made a number of recommendations for further policy action, including the development of non-oil revenues and the small and medium sized enterprises (SME) sector – SMEs currently account for a very small proportion of the Saudi Arabian economy.

The Saturday strikes on Saudi Aramco’s key oil facilities in Abqaiq and Khurais oil facilities have been claimed by the Iran-backed Houthi militia in Yemen. Yet analysis of impact points of the drone attacks show they were launched from a west-northwest direction rather than from Yemen to the south, according to senior US administration officials.

“What happened is a real test to the strength of Saudi Arabia in facing these destructive attacks,” said al-Jadaan, adding that the attacks had no impact on the country's economy.

Meanwhile, he went on to add that Saudi Arabia's non-oil growth forecast, which is what the Kingdom currently focuses on at the moment, is expected to rise to three percent from 2.9 percent. His projection is in line with reports from the International Monetary Fund (IMF) and others.

In the first half of 2019, Saudi Arabia’s budget deficit was down 86 percent to 5.7 billion riyal year-on-year, while non-oil revenue edged up 14.4 percent, the minister said to Al Arabiya.

Saudi Arabia has returned its oil supplies to levels comparable prior to Saturday’s attacks on Aramco’s oil installations, the Kingdom's Energy Minister Prince Abdulaziz bin Salman said in Jeddah on Tuesday evening.

He said the Kingdom will maintain full oil supply to its customers this month, while oil production capacity will rebound to 11 million barrels per day (bpd) by the end of September.