Business & Money | Saturday 25 August, 2018 11:55 am |

Saudi Arabia is moving ahead with economic reforms and growth in its non-oil economy is expected to accelerate, according to the IMF.

The findings are contained in a report from the Washington-based organization published on Friday following the conclusion of its consultations with the Kingdom last month.

It commended the government for progress made to date in pursuing its reform agenda and emphasized that the stronger oil price should not slow momentum.

The IMF expects real GDP growth to increase to 1.9 percent in 2018 with non-oil growth strengthening to 2.3 percent.

“The authorities are continuing with their fiscal reforms including through the introduction of the value added tax (VAT) and further energy price increases at the beginning of 2018.”

The lender also noted that inflation had increased in recent months with the introduction of VAT as well as higher gasoline and electricity prices. It forecast inflation of about 3 percent this year before stabilizing at around 2 percent over the medium term.

The IMF was broadly upbeat on the Saudi banking sector with credit and deposit growth although weak, expected to strengthen due to higher spending and non-oil growth.

Bank profitability was also expected to increase as interest margins widen and banks remain well capitalized.

The IMF findings coincide with intense investor scrutiny of Saudi Arabia’s plans for its national oil company, Saudi Aramco.

Saudi Energy Minister Khalid Al-Falih said on Thursday the government remained committed to the IPO “at a time of its choosing” while dismissing media reports that the sale had been shelved.

Analysts at Capital Economics do not see significant immediate economic impact from a delayed IPO.

“We don’t think another delay would have a significant direct impact on Saudi Arabia’s economy or financial markets in the near-term,” it said in a report on Thursday.