RIYADH: Saudi Arabia yesterday announced a record budget of $228bn for next year, slightly up from $218.7bn set aside for this year.
The world’s largest oil exporter said it also expected to conclude this year with a budget surplus of SR206bn ($54.9bn), after budgeting for a surplus of around $613m.
Revenues in 2013 were expected to reach SR1.131trn compared with expenditure of SR925bn, according to a government statement.
The kingdom had budgeted for revenues of $221bn in 2013, and an expenditure of $218.7bn.
For 2014, Saudi Arabia is expecting a balanced budget of SR855bn ($228bn), said the statement carried by SPA state news agency.
A quarter of the budget is earmarked for education and training, including building 465 schools and revamping 1,500 others.
The government will also spend SR22bn in 2014 on 185,000 Saudis already on scholarships to study abroad. The health sector will get SR108bn.
Oil continues to contribute the bulk of revenues for Saudi Arabia, which pumps 9.7 million barrels per day of oil, and has a capacity to produce more than 12 million bpd.
The Opec kingpin’s economy is expected to grow 3.8 percent this year, according to the statement.
The International Monetary Fund is expecting the Arab world’s largest economy to grow by 3.6 percent and 4.4 percent in 2013 and 2014 respectively, after expanding by 5.1 percent last year.
Saudi Arabia has been using part of its large windfalls of oil revenues to repay its public debt, which has dropped to SR75.1bn ($20bn), or 2.7 percent of its gross domestic product, according to the statement.
Public debt stood at SR98.8bn ($26.3bn) at the end of last year.
“I think they are demonstrating that there is discipline and commitment to a sustainable fiscal expansion,” said John Sfakianakis, chief investment strategist at MASIC, a Saudi investment company.
“Both budgeted spending next year and actual spending this year have a smaller increase than in previous years. Although they are still overspending, they’re overspending by less.”
Actual expenditure and revenue often turn out to be much larger than its projections, with the kingdom posting big budget surpluses, as oil prices generally come in higher than its conservative assumptions.
Nevertheless, the 2014 budget suggests Riyadh has decided to rein in fiscal policy after massive expansion driven partly by the 2011 uprisings in the Arab world. Saudi Arabia escaped major unrest but boosted welfare spending sharply to buy social peace.
“The Saudi government has been spending generously to deal with the financial crisis, unemployment and housing problems. Now there is a need to press on the brakes,” said Saudi economist Abdulwahab Abu Dahesh.
Next year’s 4.3 percent rise in planned spending is far smaller than the 19 percent leap envisaged by the 2013 budget plan, and the lowest increase since 3.5 percent in 2003, calculations showed.
IMF told Saudi Arabia this year it was spending more than it should if it wanted to preserve oil wealth for future generations, and that its state budget could fall into deficit by 2016 if expenditure continued rising fast.
AFP/Reuters
