By Arab News
By Khalil Hanware and P.K. Abdul Ghafour
Saudi Arabia yesterday announced a record surplus budget SR 9 billion for 2013, projecting expenditure at SR 820 billion and revenues at SR 829. It has allocated SR 285 billion for new projects, SR 204 billion for education, SR 100 billion for health, SR 65 for transport and SR 57 billion for water, industry and agriculture.
The budget was approved by a special Cabinet session, which was chaired by Custodian of the Two Holy Mosques King Abdullah at his palace in Riyadh. “We hope it will be a budget of goodness and blessing for Saudis as well as other Muslims,” the king said.
In his budget speech, which was read out by Cabinet Secretary-General Abdul Rahman Al-Sadhan, King Abdullah said the budget reflects the government’s plan to increase spending to strengthen the economy.
He said greater spending would create more job opportunities for Saudis and improve services being extended to the public. He reiterated the government’s desire to invest more in the country’s human resources.
“We have allocated SR 204 billion for education and training and improve learning atmosphere in tune with modern developments in the field,” the king said. He also disclosed plans to establish five new medical cities and 19 new hospitals in various parts of the country.
Saudi economists have commended the budget as quite promising but expressed concerns about growing inflation and unemployment. “Although these (budget) numbers are quite promising for a sound and robust economy, there are still challenges to the government’s development plans in terms of quality, efficiency and quick implementation of mega projects,” said Basil Al-Ghalayini, CEO of BMG Financial Group.
Preliminary economic data show that 2012 was a healthy year for the economy with real GDP growth of 6.8 percent, said Fahad Alturki, senior economist at Jadwa Investment.
“Nonoil private sector maintained a strong growth of 7.5 percent year-on-year, with construction, transport and communications sectors expanding at double-digit rates,” he told Arab News.
King Abdullah thanked everybody who prayed for his quick recovery and good health following a back surgery he underwent at King Abdul Aziz Medical City in Riyadh last month.
He reiterated the government’s plan to achieve balanced development for all regions of the Kingdom while adopting new economic and financial reforms to accelerate growth.
King Abdullah stressed the importance of using the Kingdom’s natural resources judiciously balancing the requirements of present and future generations.
“Let us not forget that the Kingdom, as you remember 10 years ago had a debt of more than SR 685 billion, incurring a heavy burden on the state and delaying a number of development plans,” he said, adding that public debts have been cut down to SR 98 billion.
“There is plenty of wealth, thanks be to Allah,” the king said, addressing the ministers. “You have no excuse after today for any dereliction or negligence,” he added. He urged ministers to explain to the media about their budget plans and proposals.
Addressing the budget session, Finance Minister Ibrahim Al-Assaf said the Kingdom’s budget surplus for 2012 amounted to SR 386 billion. Revenues in 2012 amounted to SR 1,239 billion, while expenditure hit SR 853 billion.
Saudi Arabia’s gross domestic product (GDP) is expected to reach SR 2.72 trillion in current prices by the end of 2012 according to the General Statistics Department’s estimates, registering a growth of 8.6 percent compared to last year, the minister pointed out.
The Kingdom’s nonoil GDP is expected to grow 11.2 percent with a public sector growth of 10.6 percent and private sector growth of 11.5 percent in current prices.
The GDP growth in fixed prices is expected to reach 6.8 percent with the petroleum sector making a growth of 5.5 percent, nonoil sector 7.2 percent, public sector 6.3 percent and private sector 7.5 percent.
“On the basis of these figures the total contribution of the private sector to the GDP has reached 58 percent,” Al-Assaf said.
He added: “All components of GDP recorded positive and healthy growth in 2012. More specifically, nonoil industrial sector is estimated to grow by 8.3 percent; construction by 10.3 percent; electricity, gas, and water sector by 7.3 percent; transport, storage and communication sector by 10.7 percent; wholesale, retail, restaurants, and hotels by 8.3 percent; and finance, insurance and real estate by 4.4 percent.”
Al-Assaf said the country’s cost of living index rose 2.9 percent in 2012 compared to the previous year. “The Kingdom’s public debts will be slashed to SR 98.8 billion (which is 3.6 percent of the GDP) by the end of 2012 from SR 135.5 billion in 2011,” the minister said.
Al-Assaf referred to a report issued by the International Monetary Fund in 2012 commending the Kingdom’s monetary and financial policies. “Saudi Arabia has been using its high oil prices to accelerate growth and achieve local development targets,” he quoted the IMF report as saying. IMF executive directors have also commended the Kingdom’s efforts to stabilize international oil markets. They have noted the Kingdom’s efforts to fight money laundering and terror funding.
Al-Assaf highlighted the Kingdom’s economic strength. According to a report issued by G20, Saudi Arabia has achieved top place among the member states in fulfilling structural reforms, fiscal discipline, financial markets regulations, resisting trade protectionism and progress in the implementation of the development agenda.
Standard and Poor’s agency for credit rating announced that the Kingdom retains its high sovereign credit rating (AA-) with a stable outlook. “This announcement comes as a confirmation of the strength of the Saudi economy and the strength of its financial position globally,” Al-Assaf said.