The government on 27 November passed a budget for the new year featuring a 7 per cent cut in spending as compared with the actual expenditure for 2002. The new budget foresees a deficit of SR 39,000 million ($10,400 million), equivalent to about 5.7 per cent of gross domestic product (GDP). The Finance & National Economy Ministry has also announced that it expects real GDP growth to be 0.74 per cent in 2002, with real growth in the non-oil private sector running at 4.2 per cent.
Actual spending in 2002 is expected to be SR 225,000 million ($60,000 million), compared with a target of SR 202,000 million ($53,900 million). However, the government notes that the actual figure includes an extra month of public sector salaries to take into account the difference between the hijri and fiscal years. The actual 2002 figure is also 12 per cent lower than actual spending in 2001. The spending target for 2003 has been set at SR 209,000 million ($55,700 million). Revenues are budgeted to reach SR 170,000 million ($45,300 million), compared with a 2002 target of SR 157,000 million ($41,900 million) and actual revenues last year of SR 204,000 million ($54,400 million).
The revenues target for 2003 implies an average price of $17.50 a barrel for Saudi crude oil - or about $19.50 a barrel for Brent - and production of about 7.5 million barrels a day, according to Saudi American Bank chief economist Brad Bourland. 'It is a responsible budget on the spending side, and based on a conservative revenues forecast,' he says.
Nominal GDP is estimated to have grown by 2.3 per cent in 2002 to reach SR 695,000 million ($185,300 million). The ministry said the productive areas of the non-oil private sector showed strong real rates of growth: 5.7 per cent for industry; 7.1 per cent for communications and transport; 4.5 per cent for electricity, gas and water; and 3 per cent for construction.
The current account showed a surplus equivalent to $8,987 million in 2002, compared with $9,360 million in 2001.
Total public debt at the end of 2002 is estimated at SR 637,500 million ($98,000 million), equivalent to 92 per cent of GDP. The government plans to use privatisation receipts to reduce public debt in the coming period.
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