Author: Al-Iktissad Wal-Aamal (Pan Arab) Posted January 17, 2012
On January 26, 2011 Saudi Arabia announced its 2011 budget, the largest in its history, with plans to focus on future investments. The distinctive results of 2011 are a starting point for the 2012 budget.
Saudi Minister of Finance, Ibrahim al-Assaf, described the Saudi economy as the best it has been in 20 years. He noted that spending 24% of the new budget on investment in human development such as education and training will help make economic growth sustainable, creating more job opportunities through a knowledge-based economy, built on foundations of vocational, educational and technical support.
According to figures published by the Ministry of Finance, the total revenues of the 2011 budget will exceed the threshold of one trillion Saudi Rials, reaching SR 1,011 trillion, which is equivalent to US $296 billion. Meanwhile, total spending stood at $214 billion. Thus the actual expenditure surpassed planned expenditure by $155bn, an increase representing about 38%. This came as a result of the housing and social grants incorporated in the monarch’s initiative. The initiative included two-month salary bonuses, an increase in the capital of the Real Estate Development Fund (SAMIRAD) and Saudi Credit and Savings Bank, support to additional scholarship programs allowing Saudi students to study abroad, and other spending on various projects to support economic activity.
Despite the significant increase in actual spending, Saudi Arabia managed to produce a respectable surplus of nearly $82 billion, owing to a rise in oil prices throughout the year.
Thus, public debt is expected to decline by the end of 2011 to about $36 billion, representing 6.3% of GDP compared to $44.5 billion at the end of 2010.
In light of these results, it is not surprising that the 2012 budget will be historically large in terms of planned spending and predicted revenues. Most importantly, education, health, social services and infrastructure will be allocated the largest portion of the budget.
These objectives reflect the fundamental conviction that the Saudi economy has reached a stage of stability and sustainable growth, enjoying an unmistakeable durability put to test during the recent global financial crisis. The budget has also taken into account the constant changes to the world economy in 2011. It has become necessary to focus on the potentials of the Saudi youth to cope with the requirements of the labor market, providing and enhancing job opportunities and focusing on developing the infrastructure sector.
Saudi Arabia plans to adopt a landmark budget in 2012, with expenditure estimated at $184 billion, an increase of 19% compared to 2011, with predicted revenues amounting to $187 billion. The expected surplus is $3.2 billion.
The priority of the government is clear in the planned distribution of the 2012 budget as follows:
The new budget and spending plan will undoubtedly boost the Saudi economy, which achieved distinguished results in 2011. Estimates and recent forecasts indicate that real growth reached 7% in 2011, and the private sector will also grow by 8.3% [in the coming year].
Read More: http://www.al-monitor.com/pulse/business/2012/01/the-largest-budget-in-the-histor.html