Big Spender Saudi Arabia upholds high budget

Published: Updated:
Read Mode
100% Font Size
4 min read

Although the Saudi government did not reveal their expectations for oil prices, the newspaper cited an estimate by Riyadh-based Jadwa Investment, saying it had set production at 9.6m barrels a day at $66 a barrel, while last year’s price average was about $111.5 a barrel, the report noted.

In 2012 the country’s $727 billion economy expanded by 6.8 per cent, including 7.2 per cent for the non-oil industries, the finance ministry said.

Finance Minister Ibrahim al-Assaf tagged 2012’s rise in inflation at 2.9 percent as compared with the previous year, and 4.5 percent as compared with the benchmark year of 1999, according to the SPA news agency.

He told ministers that real growth in the Kingdom’s gross domestic product (GDP) is expected to be 6.8 percent in 2012, with 5.5 percent growth in the oil sector and 7.2 percent in other sectors.

In 2011, the Kingdom registered an impressive budget surplus of 306 billion riyals ($81.6 billion), as revenues turned out to be double the conservative forecast.

Revenues that year hit 1.110 trillion riyals ($296 billion) compared to a forecast of 540 billion riyals, while expenditure hit 804 billion riyals ($214.4 billion), after it was planned at 580 billion riyals.

But Hirsh also warned against the Kingdom’s dependence on oil-fuelled government spending.

“A drawback essentially will be that the high expenditure plan is still funded through oil revenues, putting the Kingdom at exposure to adverse moves in global commodity markets,” he said.

“But this will only effect the Kingdom in the medium to long term given its huge foreign currency reserves and savings over the past decade,” the economist added.

Top Content Trending