SAUDI ARABIA

Saudi Arabia is a monarchy ruled by the Al Saud dynasty. The King fulfils executive, legislative and judicial functions, and presides over the council of Ministers as a Prime Minister. His prerogatives include appointing and dismissing members of the council of Ministers. The Kingdom does not have a written constitution. Nevertheless, in 1992, the King issued the Basic Law of Governance, a document that establishes guidelines of the citizens’ rights and responsibilities, as well as how the central government operates. This document led to the establishment of the Consultative Council in 1993, a quasi-legislative body. The consultative council drafts legislation along with the council of Ministers and presents it to the King for his approval.

While the Ministry of Economy and Planning is in charge of national development, the Ministry of Interior is responsible for rule of law, order and oversight on the development of Emirates and governorates. Established in 1975, the Ministry of Rural and Municipal Affairs (MoMRA) oversees the administration of the municipalities, through city and town planning, as well as the development and maintenance of basic infrastructure, including town cleaning, hygiene and roads. During the 1980s, the Ministry of Rural and Municipal Affairs paved the way to the promulgation of the Municipal and Rural Affairs Law, which formed municipal councils in order to establish decentralisation. At the highest level, other government institutions are responsible for planning and delivering services – the Crown, the Royal Diwan (the primary executive office of the King), the Council of Economic and Development Affairs (CEDA), Ministries, Strategy Committees and Project Management Offices.

Saudi Arabia has taken several initiatives to define the roles of its institutions, their missions and prerogatives to increase their revenue, reduce the country’s dependency on its oil-economy, switch towards decentralisation and provide subnational authorities with more administrative and financial autonomy. Approved by the Council of Ministers on 25 April 2016, the Kingdom created Saudi Arabia Vision 2030, a comprehensive and integrated national development project. Vision 2030 benefits from the continuous supervision of HRH Prince Mohammed bin Salman, the Crown Prince, Deputy Prime Minister and Minister of Defence, as well as President of the Council of Economic and Development Affairs. It mandates that regional and municipal authorities contribute to its programmes’ planning and implementation.

In the recent years, the Kingdom has been pushing for political and institutional reforms. The Ministry of Rural and Municipal Affairs in particular adopted several initiatives to enhance the role of local authorities (municipalities) and propose a new urban vision, including the Future Saudi Cities Programme, closely tied to Vision 2030, which the government issued by Royal Decree, in cooperation with the UN Human Settlements Program (UN-Habitat). This initiative aims to enhance sustainable urbanisation by strengthening cities, their institutions and their policies and addressing institutional performance-related shortcomings. It analyses the Regions Act, the Municipalities Statue and the Building Act and provides legislative and institutional requirements, in order to effectively implement policies and regional and city plans.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2022)
285 municipalities )مركز (	136 governorates )محافظة (	13 Emirates ) إمارة أو منطقة (
Average municipal size: 122 154 inh.	-
285	136	13	434

OVERALL DESCRIPTION: Saudi Arabia is divided into Emirates, which, in turn, are divided into governorates and municipalities. This subdivision system is officially named the Organisation of the Kingdom of Saudi Arabia, and is provided by the Royal Order A/92 issued on 2 March 1992, also known as the regions’ system, and amended by Royal Order N A/21 on 17 September 1993. In the Emirates of Riyadh, Mecca, Jeddah and Medina, some authorities benefit from a special status to manage their own finances and separate their budgets from the Ministry of Interior. Nonetheless, the central government has the right to dissolve local governments, select contractors to implement local projects and remove the local council’s members.

REGIONAL LEVEL: The Regions’ System divides the Kingdom into 13 Emirates further divided into provinces (مناطق) and administrative regions (Emirates of the provinces: المناطق إمارات). They form the first level of administrative division. The Law of Provinces, promulgated in 1992, aims through local authorities to improve provincial administrative standards and development, in particular regional and urban development, through reinforcing decentralisation at the provincial and local levels. A prince (Emir) from the royal family is appointed to the rank of Minister by the King to head each region and its regional council as a Provincial Governor. The regional council includes the governors relative to the region, as well as local heads of the sectorial ministries, heads of government agencies, ten citizens and local civic leaders. A deputy Emir assists each Emir.

INTERMEDIATE LEVEL: Saudi Arabia has 136 governorates, which constitute the second subnational government tier. The Third Article of the regions’ system classifies governorates into three categories according to the availability of services, population size, environment conditions, housing, means of transportation, geographical and security considerations. A governor leads each governorate and is assisted by a deputy governor. Governors and their councils are responsible for functions related to maintaining law and order, and supervising socio-economic development (finance, education, agriculture, health and municipalities within their territories). The royal family usually appoints regional governors, who preside over one or more municipal councils. However, they have little power over project budgets and their implementation. On the other hand, they participate in the preparation of master plans.

MUNICIPAL LEVEL: Municipalities are legal entities with financial and administrative independence. There are 285 municipal councils within Saudi governorates, which are composed of members half appointed and half elected. Authorities of municipalities are (i) the municipal council, which reports and monitors, as well as (ii) the head of the municipality, which implements strategies with the assistance of municipal authorities. Municipal councils participate in the preparation of master plans. The royal order M/5 in 6/2/1397AH enacts the statute of municipalities. The new Ministry of Municipality’s strategy shifted the role of municipalities to enhance local capacities and a new urban vision, from managing daily immediate services to managing the five dimensions of city prosperity. Furthermore, Saudi Arabia has also Baladiyahs, which are political subdivisions of the Kingdom, equivalent to cities.

Saudi Arabia has demonstrated a strong will for decentralisation. The new Ministry of Municipality’s strategy aims to improve local capacities, productivity, infrastructure development, equity and social inclusion, environmental sustainability and urban development of cities. However, the roles of local authorities are not similar across Saudi Emirates. The development committees of Mecca and Medina, for instance, benefit from a special status, and have several responsibilities, including performing administrative functions, planning and development, as well as providing education and health services.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Intermediate level	Municipal level
1. General public services (administration)	Defines the needs that would increase the prosperity of the regionDefines the needs of municipalitiesDevelops and improves public servicesSupervises governmental institutions and their employees within the adequate territorial organisation and ensures proper performance of their work in honesty and loyalty with consideration of their affiliation with various ministries and services	Develops and improves public servicesSupervises governmental institutions and their employees within the adequate territorial organisation and ensures proper performance of their work in honesty and loyalty with consideration of their affiliation with various ministries and services	Prepares permitting crafts and premisesPublic AcquisitionDetermines and collects penalty chargesSupervises election of crafts' leadersAny other responsibilities defined by the Council of Ministers
2. Public order and safety	Maintains security, order and social stabilityGuarantees human rights and freedom	Maintains security, order and social stabilityGuarantees human rights and freedom	Preserves safety and comfortStops and eradicates any encroachment
3. Economic affairs / transports	Defines the needs that would increase the economic prosperity of the region and includes them in the State’s development plansDefines the needs in finance	Takes responsibility for economic developmentEnsures economic development	Builds markets and determines shopping areasDetermines locations of roaming sellersOrganises transportation in coordination with concerned agencies
4. Environment protection	Defines the needs in agriculture	-	Preserves cleanness (waste management) and city appearanceArranges parks and open spaces and organises and monitors them directly or indirectlyProtects citizens from wild animalsAvoids flood hazards and establishes green belts around cities.
5. Housing and community amenities	Studies and approves urban development plansProtects state property and assets, and prevents its usurpationStudies urban plans for villages and towns, and follows up with their implementation and budget	Protects state property and assets, and prevents its usurpation	Issues Permits for construction of buildings and infrastructure
6. Health	Defines the needs in health	Supervises developments in health	Protects public health and clears all swampsBuilds and organises slaughter houses
7. Culture & Recreation	-	-	Promotes cultural, sport and social activitiesArranges tourist places
8. Education	Defines the needs in education	Supervises developments in education	-
9. Social Welfare	Defines the needs that would increase the social prosperity of the regionSuggests activities of public interest and encourages the population to engage in themEnsures public works	Ensures social development and public works	Monitors and inspects foods and consumer goods including supply and prices, scaling, and standards with the participation of related agenciesCooperates with other agencies to stop begging, and builds special houses for the disabledBuilds and operates cemeteries

Scope of fiscal data: Central government and municipalities.

Other

Availability of fiscal data: Low

Quality/reliability of fiscal data: Low

GENERAL INTRODUCTION: The Kingdom remains highly centralised, with several institutions governed by different laws and continuously competing for central resources. The central government finances the majority of public services and infrastructure at the subnational level. The Ministry of Finance allocates funds to ministries, as well as to territorial agencies, such as regional councils and Emirs, according to factors such as the population size. At the local level, municipal governments prepare their budget proposals and send them to the Ministry of Finance, as well as the Ministry of Rural and Municipal Affairs.

ⓘ No detailed data available for this country

EXPENDITURE: In 2017, Saudi Arabia allocated 10.9%, 5.4% and 3.03%, of its general budget, to security and regional administration, municipal services, as well as public administration respectively.

DIRECT INVESTMENT: As part of the Kingdom’s Vision 2030, the Ministry of Rural and Municipal Affairs is discussing 15 initiatives to enhance investment in municipalities and developing cities, through the sub-committees of the Advisory Committee for Investment in the Municipal Sector. In addition, the central government launched the Municipal Investment Forum in 2020 in order to enhance investment locally and regionally, particularly in 17 municipalities around Saudi Arabia, in line with Vision 2030. The Forum aims to create strategies to encourage municipal investments, ranging from planning to implementation. In addition, the Municipal Investment Portal “Furas” was launched the same year, in order to digitalise and gather municipal and regional investment strategies in one platform.

ⓘ No detailed data available for this country

No data is available.

ⓘ No detailed data available for this country

OVERALL DESCRIPTION: Municipalities mainly rely on transfers from the central government. Municipal revenues are defined in the System of Municipalities and Villages, issued by Royal Decree N M/5 on 21/2/1937 AH. Municipal own-revenues remain low, although they are expected to increase due to the National Transformation Programme (NTP). Launched by Saudi Arabia to support the New Urban Agenda (NUA), the NTP aims to develop Saudi infrastructure and create an environment that assists public, non-profit and private sectors to achieve Vision 2030. The NTP proposes that Saudi municipalities generate 40% of their revenue locally by 2020, which has not been achieved yet. The Emirates of Riyadh, Mecca, Jeddah and Medina benefit from a special status, which grants them more freedom to increase their own revenues.

TAX REVENUE: The NTP implemented a series of reforms to enforce public finances and create new taxation mechanisms, such as the White Land Tax introduced in 2015. This tax requires owners of empty urban plots designated for commercial or residential use to pay annually 2.5% of the land value; this tax is levied on urban land of 10 000 square meters. It has been adopted in the cities of Dammam, Jeddah and Riyadh and aims to improve the own-source revenue base of municipal governments. There are no municipal, governorate or provincial government taxes on income other than the regular income tax or Zakat, an Islamic assessment only applicable to Saudi and Gulf Cooperation Council (GCC) nationals. However, taxes are still not levied at the municipal level.

GRANTS AND SUBSIDIES: No data is available.

OTHER REVENUE: Along with the NTP’s objectives to increase municipal own revenue, the Ministry of Rural and Municipal Affairs established new municipal fees to increase municipalities’ own revenues.

ⓘ No detailed data available for this country

FISCAL RULES: At the central level, Saudi Arabia launched the Fiscal Sustainability Programme as part of Vision 2030, as a medium term mechanism of planning. It aims to sustain public finances in the Kingdom and balance its budget, by creating a financial system to support the country’s transformations. This programme established several entities to monitor public finances, including the National Debt Management Centre, the Non-Oil Revenue Development Centre, as well as the Government Expenditure and Projects Efficiency Authority.

DEBT: No data is available.

TERRITORIAL MANAGEMENT OF THE CRISIS: At the central level, the Ministry of Investment created MISA COVID-19, a taskforce to mitigate the consequences of the crisis on companies and to ensure the continuity of their operations.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: The Ministry of Finance allocated 120 billion Saudi Riyals to the private sector to mitigate the consequences of the COVID-19 crisis, including payment of municipal fees. The Public Authority for Small and Medium Enterprises (SMEs) also adopted local support measures, including postponing for three months the payment of some municipal fees due on private sector establishments and extending the postponement period for the activities in need. Moreover, the Economic Cities and Special Zones Authority (ECZA) offered a grace period for municipal service fees until the end of the first half of 2020.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Subnational finance data is not available.

ECONOMIC AND SOCIAL STIMULUS PLANS: Vision 2030 aims to mitigate the consequences of the COVID-19 and to enhance the recovery. The plan promotes the digitalisation of government and fiscal services, the development of fiscal and financial policy buffers, the expansion of labour market mobility and the creation of a strong climate of interagency coordination and governance. The Vision 2030 also aims to transform less economically competitive regions into attractive hubs for investments, especially non-oil related and touristic regions, by taking advantage of their territorial strenghts.

Furthermore, designed and implemented by the Quality of Life Programme, the Ministry of Rural and Municipal Affairs launched the initiative “Digital Transformation of the Municipal Sector”, which aims to accelerate the digitalisation of the municipal sector by building the necessary digital infrastructure, reducing duplicated technical constituents, such as databanks, apps, unifying services and procedures, in order to guarantee an efficient management of time, costs and efforts.