MANAGING PUBLIC DEBT: THE CASE OF SAUDI ARABIA

Abstract

Managing public debt efficiently and effectively requires sound public finance management and high-quality performance by financial and non-financial institutions in a given country. Likewise, the quality of a nation’s economic and financial planning is an essential element in making the most of public debt and reducing the economic risk of default. This paper analyzes the levels of efficiency and effectiveness of public debt management in Saudi Arabia from 1991 to 2019 by examining the relationships among the following variables: oil and non-oil revenues as a share of total revenues, current and capital expenditures as a share of total expenditures, the deficit/surplus-to-GDP ratio, and the general government’s gross debt as a percentage of GDP. The results of the study suggest that the current system of managing the state’s financial affairs and public debt may not be suitable for achieving the goals of Saudi strategic plans. Therefore, the study calls for the development of economic and financial policies that include all elements affecting the economy (e.g., governmental performance). The study also calls for the adoption of a long-term fiscal policy that remains stable as state revenues increase and for supporting the implementation of good governance principles in the public finance system (e.g., strengthening public participation in the public budgeting process and supporting the independence of financial supervisory agencies).

Data:
Received: 25 Mar 2021
Revised: 9 May 2021
Accepted: 6 Jun 2021
Published: 20 Jun 2021