Saudi Arabia requires reform to manage ageing population

11 July 2016

Report by S&P says age-related government spending could rise to 14 per cent of GDP by 2050

An ageing population may put pressure on Saudi Arabia’s public debt and government spending, according to a report published by US rating agency Standard & Poors.

The report says that Saudi Arabia’s growing elderly population could put pressure on public finances and increase government debt over the next 30 years.

“In line with United Nations figures, we forecast the Saudi Arabian population will expand rapidly from 32 million to 46 million between 2015 and 2050. Over the same period, the proportion of elderly people will rise to 15 per cent of total inhabitants from 3 per cent today,” says the report.

The report adds that as a result age-related government spending such as pensions and healthcare would rise to 14 per cent of GDP by 2050 from 5 per cent today. “This could lead to a rapid increase in Saudi Arabia’s net debt ratio to 340 per cent of GDP by 2050 if governments were to take no further policy action.”

Earlier this year Saudi Arabia released its Vision 2030 and the National Transformation Plan (NTP), which was put together as the kingdom looks at ways to transform its economy and shift its dependence away from the hydrocarbon sector.

Part of the NTP was the cutting of government expenditure on things such as public wages, pensions and other state benefits that are seen as extremely generous.


MEED experts on Saudi Arabia’s National Transformation Programme

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications