Under the new budget, expenditure for 2004 will rise by SR 21,000 million ($5,600 million) from this year’s budgeted spending figure of SR 209,000 million ($55,700 million), but it stands as a SR 20,000 million ($5,350 million) contraction on the actual SR 250,000 ($66,700 million) spend expected for 2003.
The bulk of the government’s budgeted spending increases has been allocated for education, health and – as a result of the ongoing domestic struggle with militants – security.
Government revenues in 2004 are budgeted to reach SR 200,000 million ($53,300 million) compared with projected revenues of SR 170,000 million ($45,300 million) for 2003. However, the figure is based on a conservative assessment of oil prices next year. Actual government revenues in 2003 will come in at about SR 295,000 million ($78,700 million), and even allowing for a deterioration in Saudi production and the prices it obtains for its hydrocarbons, the SR 200,000 million ($53,300 million) target is likely to be exceeded.
‘The revenue projections [of SR 200,000 million] appear very conservative,’ says Ihsan Ali Bu-Hulaiga, an economist and member of the Majlis al-Shoura (consultative council). ‘It seems to me the scenario of 2003 could be repeated.’
The SR 45,000 million ($12,000 million) budget surplus is only the second surplus generated since 1981.
‘With such a surplus it is high time for the government to consider setting up a stabilisation fund for times of oil price volatility,’ says Bu-Hulaiga. Analysts also expect the government to use some of the surplus income to reduce the kingdom’s domestic debt pile, which in 2002 grew to almost 100 per cent of gross domestic product (GDP).
In the written budget address from King Fahd, GDP was said to have grown by 6.4 per cent in real terms in 2003, with the private sector contributing a real growth rate of 3.7 per cent.