Higher oil prices propel Saudi Arabia's economy

• Pages: 5

Page 5

Oil revenues helped Saudi Arabia markedly boost real GDP growth over the past two years, turn its fiscal position from deficit to surplus, significantly reduce debt, and double its external current account surplus to 14 percent of GDP in 2003, according to the IMF's annual assessment. Real non-oil GDP growth is estimated to have increased to 5 percent in 2004 from 3.8 percent in 2003 and is expected to remain strong over the medium term.

The IMF's Executive Board concluded that the medium-term outlook remained favorable but that high unemployment and a rapidly growing Saudi labor force pose serious challenges. It encouraged the Saudi authorities to continue to use the country's oil resources efficiently, implement comprehensive structural reforms, and reduce the economy's vulnerability to oil price fluctuations. It expressed support for the authorities' plans to reduce non-security current expenditures, while at the same time using higher oil revenues for health, education, and...