at some point in time. depreciation of the currency may in turn further fuel inflation and offset the impact of economic stimuli through negative balance sheet effects on consumption and investment. structural policies the second building block is structural policy. the sustainability of nominal convergence is to a large extent conditional on a sufficient degree of structural, or real, convergence. a broad indicator of the degree of real convergence with the euro area is the catching - up of per capita incomes and price levels of new members with those of the euro area. convergence in real per capita gdp levels has to be fostered by far - reaching structural and institutional changes aimed at enhancing the growth potential of the economy. such reforms typically aim at strengthening the flexibility of adjustment mechanisms in the economy and improving the business environment. when goods and labour markets are rigid, inflation and inflation expectations may remain high even in the presence of monetary regimes committed to the achievement of price stability. both governments and social partners share responsibility for ensuring that wage determination takes sufficient account of labour market conditions and does not jeopardise competitiveness and employment. active labour market policies should tackle persistent bottlenecks, such as skill mismatches. finally, protection of vested interests in the product markets and lack of mobility and adaptability in the labour markets undermine job creation, in particular for young and less qualified workers, as well as for all those who face problems entering the labour market. lowering barriers to entry will increase competition, particularly in those domestic service sectors that are sheltered from international competition, and thus support price stability. economic growth led by the private sector needs to be fostered by a stable and business - friendly policy environment. in this respect, governments should strive for transparency and predictability of the policy regime, a low compliance burden, and effective governance in applying the rule of law. fiscal policy it is also crucial that the achievement of price stability is supported by sound fiscal positions, the third building block of convergence. irresponsible fiscal policies can jeopardise credibility, as higher inflation becomes desirable to reduce the real value of government debt. fiscal policies should be sustainable and oriented to the medium term. they should further aim at mitigating undesirable trend growth differentials through “ high quality ” expenditure and tax policies. in particular, high and inefficient public expenditure can put a brake on economic activity by imposing a high tax burden on the economy and channelling resources into unproductive uses. financial policies the fourth building block is financial policy.

and approved the building of 500, 000 housing units in all regions of the kingdom over the coming five years with allocations of rls 250 billion. the limit of housing loans extended by the real estate development fund was increased from rls 300, 000 to rls 500, 000 which will hopefully provide more houses for citizens and constrain the inflationary pressures stemming from the increase in house rents. you also ordered setting a minimum wage of rls 3, 000 for all saudi government employees, allocated a monthly amount of rls 2, 000 for job seekers, and raised capital of the saudi credit and saving bank by rls 30 billion. the number of family members covered by the social security was increased from 8 to 15 with an allocation of rls one billion for that purpose. the government subsidies for charity associations rose by 50 percent to rls 450 million annually, and needy families ’ sons and daughters were supported to join bis central bankers ’ speeches universities through allotting them a portion of seats, facilitating their admission requirements, and exempting them from some tuition fees. this package of honorable royal decrees will enhance the standard of living of the least - income segment of population and promote its ability of saving and, thereby, raise its future productivity and income, and reduce poverty, to which you always attach considerable attention. in the health care arena, you ordered supporting the ministry of health with rls 16 billion in order to carry out the expansion of a number of hospitals and health centers. you increased the maximum limit of the ministry of finance ’ s financing program of private hospitals from rls 50 million to rls 200 million. this would hopefully enhance health care services in the kingdom. under your wise leadership and continuous guidance, the supreme economic council continued to accomplish a number of development steps aimed at restructuring and reorganizing the economy and streamlining regulations and legislation in order to promote the rise of the level and competitiveness of the economy, achieve the optimum operation of the production factors and provide an attractive environment for domestic and foreign investment. as a result, the investment environment has improved. according to the “ doing business report 2012 ” issued by the world bank, the kingdom ranked twelfth among 183 world countries in terms of ease of business performance. the executive board of the international monetary fund noted that the kingdom was well posed to encounter the global financial crisis. however, the sound supervisory and regulatory frameworks significantly contributed to strengthening the capacity of the financial sector to withstand the crisis. the board stressed that