The focus of the recommendations came in the area of fiscal reform, with the IMF urging the mobilisation of non-oil revenues. ‘The directors welcomed the early implementation of the new corporate income tax as an important step toward tax system modernisation,’ read the IMF public information notice. ‘Directors noted that introducing excises on selected consumer goods could compensate in part for the loss of customs revenues arising from the adoption of the common external tariff of the GCC.’

The IMF also commended recent steps aimed at giving greater autonomy to, and the privatisation of, state enterprises, and ‘they encouraged the authorities to make further progress in this area’.

The report was based on 2002 full-year macroeconomic data, but it stressed that the situation was set to improve in 2003. ‘The fiscal accounts would likely be in balance and public debt is projected to decline. The external current account surplus is expected to be higher than in 2002, and SAMA’s [Saudi Arabian Monetary Agency – central bank] net foreign assets could rise to the equivalent of 10 months of prospective imports. Real non-oil GDP [gross domestic product] growth is expected to show a pick-up.’

For detailed analysis of the Saudi Arabian economy see next week’s MEED Saudi Arabia Special Report