Davos: Saudi Arabia’s growth this year will be “significantly higher” than the International Monetary Fund’s new forecast, according to Finance Minister Mohammad Al Jadaan.

Economic expansion will be “north of 1 per cent,” Al Jadaan said in an interview Tuesday at the World Economic Forum in Davos, Switzerland. The IMF lowered its forecast to 0.4 per cent from 2 per cent in its World Economic Outlook report update on Monday, citing the impact of lower oil production agreed by members of the Organisation of the Petroleum Exporting Countries.

“We have various information that they may not have, so that could explain the difference,” Al Jadaan said, referring to growth-boosting measures including investments in renewable energy and a stimulus package in support of the private sector.

Weaker economic activity risks undermining Saudi Arabia’s long-term strategy to reduce dependence on crude, even as it tries to plug one of the Middle East’s biggest budget deficits. The government said growth fell to 1.4 per cent in 2016, the lowest since the recession in 2009, as it cut spending by suspending bonuses for public employees, reducing ministers’ salaries and raising the cost of fuel.

Saudi Arabia’s non-oil sector is expected to see a “modest” 2 per cent recovery this year, but the kingdom needs more growth to be able to create jobs, the IMF’s Saudi Arabia mission chief Tim Callen told reporters in Washington.

Al Jadaan and Saudi central bank Governor Ahmad Al Kholifey met with IMF Managing Director Christine Lagarde on Tuesday to discuss the kingdom’s 2017 budget and measures it is taking to diversify its economy, the IMF said.

Growth Boost

Government spending cuts are likely to ease in 2017, boosting growth, while the budget deficit is expected to narrow to less than 10 per cent of gross domestic product, he said.

In its latest budget, the government forecast the deficit would fall to 7.7 per cent of GDP this year, from 11.5 per cent in 2016. But the government gave two spending figures for last year — 825 billion riyals ($220 billion), or 930 billion riyals — which includes late payments for previous years. The IMF is using the latter figure, Callen said.

The Saudi Arabian Monetary Authority, as the central bank is known, has scope to boost liquidity by increasing the loan-to-deposit ratio for commercial lenders, or by placing more deposits with commercial banks, he said.

Led by Deputy Crown Prince Mohammed bin Salman, Saudi Arabia’s has embarked on a so-called Vision 2030 strategy to wean the economy off hydrocarbons. Stemming from the global slump in oil prices since 2014, it includes a plan to set up the world’s biggest sovereign wealth fund and to sell a stake of less than 5 per cent in state-run Saudi Arabian Oil Co. by 2018.

The kingdom is planning to borrow as much as $15 billion this year on international debt markets to help fund its spending plans, following last year’s $17.5 billion sovereign bond sale. That was the biggest ever emerging-market issuance, attracting $67 billion of bids, people familiar with the sale told Bloomberg at the time.

The government is “looking at opportunities in various markets” to sell bonds, Al Jadaan said. “It depends on the timing that we need and the window that is open in the market, whether sukuk or otherwise.” Al Jadaan previously said Saudi Arabia will “very likely” tap debt markets again in the first quarter.