Dubai: Saudi Arabia’s fiscal adjustment process should be gradual, International Monetary Fund (IMF) managing director Christine Lagarde said on Tuesday as she praised the kingdom’s ambitious reform drive to wean itself off a dependence on oil.

“Fiscal adjustment is continuing, with the government containing expenditures and raising additional revenues,” Lagarde said in a statement at the end of her visit to the kingdom on Tuesday.

“A large, sustained, and well-placed fiscal adjustment is needed in the coming years to continue to respond to the effects of lower oil prices on the budget.”

However, the IMF chief said the fiscal adjustment should be gradual, given Riyadh’s strong fiscal buffers, the availability of financing and the current cyclical position of the economy.

“Saudi Arabia had made good progress in initiating its ambitious reform agenda. Fiscal consolidation efforts are beginning to bear fruit,” Lagarde said.

The IMF chief, who held talks with senior Saudi government officials and attended the Future Investment Initiative conference in Riyadh on Tuesday, called for the effective coordination of reforms to ensure their success.

“Progress with reforms to improve the business environment are gaining momentum, and a framework to increase the transparency and accountability of government is in place,” she said.

“Effective prioritisation, sequencing, and coordination of the reforms is essential, and they need to be well-communicated and equitable to gain social buy-in to ensure their success.”

She commended Riyadh for moving to reduce constraints that hindered the full participation of women in the workforce and called for more incentives to boost female employment.

“Additional incentives to female employment could include supporting female entrepreneurs through dedicated programs under the small and medium enterprise (SME) initiatives, and offering temporary fiscal incentives to help businesses build or reconfigure work spaces to accommodate women in line with social norms,” she said.

During her visit, Lagarde met with Crown Prince Mohammad Bin Salman and discussed the kingdom’s economic outlook and current policy developments.

The Saudi crown prince’s Vision 2030 seeks to wean the kingdom of what he has described as its “addiction to oil.”

She also met with Saudi women — including business leaders, researchers, laywers and activists — to find ways to further boost female labour force participation and entrepreneurship in the kingdom.