Saudi Arabia sets record $228bn budget for 2014
Modest growth in spending comes as economy rose by estimated 3.8% in 2013, compared to 5.8% last year
Saudi Arabia today set its 2014 budget spending at a record 855 billion riyals ($228bn), equal to the country’s projected revenues.
That spending figure marks a modest rise of 4.3 percent on planned spending in 2013, the finance minister announced in the country’s budget plan.
Saudi Arabia’s gross domestic product grew by an estimated 3.8 percent in 2013, compared with 5.8 percent in 2012, Reuters reported.
Economists said that the budget looked “healthy” but acknowledged that the rise in spending is much lower than in previous years.
“It’s a very solid and healthy budget in support of the government’s goals and planning,” John Sfakianakis, chief investment strategist at Saudi investment firm MASIC, told Al Arabiya News.
Spending is likely to be in “strategic sectors such as education, healthcare and infrastructure,” Sfakianakis added.
The announcement speech, read out on King Abdullah’s behalf by Secretary-General of the Cabinet Abdurahman Bin Mohammad al-Sadhan, confirmed this. The official stated that the budget aims to create more job opportunities for citizens and will focus on education, training, and health, in addition to developing and improving social and municipal services.
Sfakianakis confirmed that the forecast spending marks a record for the Kingdom. But the increase is much lower than the 19 percent increase forecast in the 2013 budget plan.
“The long-term trend is very healthy. But one cannot expect that the budget can continue growing at 25 percent every year,” Sfakianakis said.
Planned expenditure for 2013 stood at 820 billion riyals and revenues at 829 billion.
While the 855 billion projection for 2014 marks a record, the actual spending for 2013 was much higher. Spending this year stood at an estimated 925 billion riyals, with revenue at 1.131 trillion, Reuters reported.
“For 2013 clearly it is the largest actual spending we have seen in the history of Saudi Arabia,” Sfakianakis said. “It’s a substantial amount. And this is many times larger than what it was in the early 2000s.”
The disparity between projected and actual spending is because Saudi Arabia often issues cautious budget forecasts due to the volatility in the price of oil, the country’s main source of revenue.
“It’s better for fiscal planning purposes to be conservative,” Sfakianakis said.