Budgeted spending on transport and communications has been increased by 12.1 per cent to SR 6,500 million, accounting for 3.2 per cent of total budgeted expenditure. The increase will allow for an acceleration in road building, but is unlikely to cover the cost of the proposed railway network. There is a need for some new spending in the telecommunications sector, where the fixed-line network is to be expanded by 400,000 lines.

Spending on education is to be increased by SR 1,000 million over the 2001 budget to SR 54,300 million, representing 26.9 per cent of total spending. The allocation is likely to be used for the construction of new schools and the employment of some 86,000 new teachers. Health spending has been increased by SR 900 million, which will be used to maintain the hospital-building programme.

Spending on autonomous organisations and institutions reflects similar trends. The General Organisation of Technical Education & Vocational Training (GOTEVT), formed in 2001, is to receive a budget of SR 1,509 million, making it the sixth-largest recipient of government funds. GOTEVT is the principal government organ responsible for the Saudi-isation process.

There has been a decline in budgeted infrastructure spending, indicating that the government is not planning any major power or infrastructure projects in the new year. The new infrastructure and industry budget is SR 10,100 million, a 9.8 per cent fall on 2001. To compensate, the government is likely to pursue infrastructure expansion through the private sector. The power sector is now undergoing a process of deregulation and the next new power plants in the kingdom are likely to emerge as part of the gas initiative. Spending on municipal services and water provision is also to fall in 2001 to SR 7,100 million from SR 8,700 million.

In line with attempts to increase the role of the private sector in the provision of utilities, funding for the Saline Water Conversion Corporation has been cut by 32 per cent to SR 2,234 million. In a similar vein, the new regulatory body for the telecommunications sector - the Saudi Communications Commission - is to have a budget of SR 70 million in its first year.

Exchange rate: $1=SR 3.75