Fiscal surplus shrinking in the kingdom as spending continues to rise
Saudi Arabia has announced that it plans to spend SR820bn ($218.7bn) in 2013, a 19 per cent rise on the budgeted spending of 2012, as the kingdom continues to pursue expansionary fiscal policies in the wake of political unrest around the region.
In announcing the budget, the Finance Ministry said total government expenditure for 2012 was SR853bn, an increase of SR163bn over the budget for the year as a result of social measures announced by King Abdullah to help prevent anti-government protests, as well as additional project spending.
Government revenues for 2012 were put at SR1,239.5bn. In its 2013 forecast, revenues were estimated at SR820bn, but with oil prices expected to be about $100 a barrel throughout the year actual revenues, along with actual spending, are expected to be much higher. Monica Malik, chief economist at EFG Hermes, is expecting government revenue to be about SR1,053.5bn.
In the government’s forecast, a surplus of SR9bn is expected, but both revenue and expenditure usually far exceed the budget published. This year’s budget is expected to continue the trend of a narrowing of the kingdom’s surplus as spending accelerates. “We do expect to see a smaller fiscal surplus in 2013 than in 2012, given forecast lower oil revenue and the higher spending levels,” says Malik.
The Finance Ministry also announced that spending on investment projects was budgeted at SR285bn, up from the SR285bn budgeted for in 2012. The biggest beneficiaries of the increased spending are the education sector, which will get 25 per cent of the total 2013 project budget and a 21 per cent increase on its budgeted spending for last year, Municipality services, which includes roads, bridges and drainage projects, will be allocated an extra 23 per cent compared with 2012, and infrastructure and housing, which will receive 16 per cent more than last year.
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