ADJUSTMENT of relations between the private sector and the government — any government — is necessary for the revival of the local market. Based on this, King Salman bin Abdulaziz issued a royal order to register all delayed dues of suppliers and contractors within government agencies and to put urgent solutions to settle them.
This order is seen as an advanced step to resolve imbalances which affected the two arms of economy — the private and government sectors. It cuts off any unrealistic interpretation on the causes of delayed settlement of private sector dues.
In the recent past, a lot were said on the impact of global oil prices, cost of war in Yemen and other assumptions on financial conditions.
Such hearsay come people who view the kingdom’s economy from a pessimistic angle.
However, the first response came in the form of the huge budget that the kingdom’s government passed recently.
This is the biggest budget in the history of the kingdom. For the first time, half of the kingdom’s fiscal budget depends on non-oil revenues.
In addition, the campaign against corruption reduced wastage of funds on projects with inflated cost. Today, such projects will be executed with the actual cost since no commission or bribe will be given.
These steps would not have succeeded without the fierce war waged by Crown Prince Mohammad bin Salman against corruption. This war returned billions of misappropriated funds to the State treasury. These funds were embezzled through corrupt activities and attempts to delay the settlement of dues for suppliers and contractors.
The remedy came in the form of a proposal that Saudi’s minister of commerce and investment submitted to the King who transformed it into a royal order with immediate effect.
It is certain that the steps taken in this regard will revive the Saudi market and lessen the impact of the endorsement of a proposal to increase taxes, considering it is wrong to impose such increase without settling dues for the private sector.
This step will definitely have a positive impact in terms of consistent financial cycle and participation of the private sector in projects with stronger capabilities as long as there is constancy in paying dues to companies; hence, the availability of more job opportunities for Saudi citizens.
In addition to implementing a mechanism for settling dues for the private sector, the most important issue is the speed of implementation which will encourage expansion of investment since the kingdom has enormous mineral wealth apart from oil whose current value is estimated at about five trillion Saudi riyals that is equivalent to $1.75 trillion.
This wealth could serve as a vital economic support if it secures investments through Saudi capital.
This means more sustainable diversification of income sources which serves the economy of the kingdom in the future in accordance with its 2030 vision.
By Ahmed Al-Jarallah – Editor-in-Chief, the Arab Times