Saudi Arabia’s recalibration of economic stimuli and fiscal sustainability

Saudi Arabia’s recalibration of economic stimuli and fiscal sustainability

Recent measures taken by Saudi Arabia and other Gulf Cooperation Council (GCC) countries are part of a new generation of fiscal management. They try to maintain a delicate balance by heeding the call by the G20, which Saudi Arabia chairs this year, for additional government spending to maintain economic growth in the face of global recession, while also following the International Monetary Fund's advice to safeguard fiscal sustainability. We see part of that balancing in action in the continuous tax recalibrations in Saudi Arabia.On Oct. 2, Saudi Arabia introduced new incentives to reverse the contractionary effects of earlier fiscal measures on real estate and stimulate this sector, which represents a significant component of the Saudi economy. King Salman's order repealed the value added tax (VAT) on real estate transactions and