Again and again: Saudi Arabia pinning its hopes to a massive budget surplus
Saudis pin great hopes on the new fiscal budget for 2014, which is expected to be announced next week. They are optimistic the new budget would make allocations for more welfare projects across the country.
Economists believe this year’s budget surplus would exceed SR225 billion ($60 billion) and that the government would continue its policy of massive spending to spur economic growth and create more jobs.
Speaking to Arab News, economist Ihsan Buhulaiga, a former Shoura member, stressed that the 2014 budget should focus on strengthening the private sector to play a greater role in accelerating growth.
“I believe that the government would continue its policy of increased spending to carry out mega projects. This will not only strengthen the private sector but also create more jobs for Saudis,” he said.
He said the capital spending in the Kingdom grew from SR38 billion in 2004 to SR285 billion in 2013. He said there are indicators that oil prices could decline due to extra supplies in the market from Iran and Iraq.
“I hope that the new budget would be a motivator for the private sector,” Buhulaiga said, adding that the sector should achieve an annual growth of not less than seven percent. He called for new regulations to allocate value jobs in the private sector to Saudis.
Fahd bin Juma, another economist, said he expected the Kingdom’s actual spending this year would reach SR870 billion, exceeding the actual spending for 2012 by SR17 billion.
“I expect that actual oil revenues in 2013 would reach SR1.08 trillion, bringing the total fiscal revenue to SR1.16 trillion. This will increase the surplus for this year to SR290 billion,” he said. In 2012 the surplus was SR96 billion because of a fall in oil prices.
Buhulaiga expected part of the surplus would go to housing and transport projects and remaining to public reserves. He said public debts would be brought down to 3.4 percent of the GDP.
Asked about measures to control inflation, Buhulaiga said the present rate, which is less than five percent is manageable. “It is a challenge for the government to keep the inflation rate below five percent.”
Abdul Aziz Al-Daeej, another economist, said he expected a four percent increase in revenues for 2014 budget, compared to 2013. He also believed the surplus would be equal to that of 2012.
Khaled Jamal, CEO of EFG-Hermes said the Kingdom is poised to post a budget surplus of SR266 billion. “It will continue to have surplus budgets in the years to come so long as oil price remains above $100 per barrel.”
Abdul Hameed Al-Amry, a member of the Saudi Economic Society, said the surplus would reach around SR225 to SR240 billion this year with total revenues amounting to SR1.2 trillion.
“This is somewhat equal to what was predicted last year,” Al-Amry said. He said total expenditures would reach to SR975 billion, 11.7 percent more than that of 2012.
The surplus, he said, would bring down the Kingdom’s public debts to less than SR92 billion, which is 3.4 percent of the gross domestic product. “This is the lowest public debt rates of governments in the world.”