Saudi Arabia unveils SR840 billion budget

Updated 29 December 2015
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Saudi Arabia unveils SR840 billion budget

JEDDAH: Saudi Arabia on Monday unveiled a SR840 billion budget, launching a phase in which the Kingdom hopes to further diversify its revenues in an era of low oil prices.
 
“Our economy has the potential to meet challenges,” Custodian of the Two Holy Mosques King Salman said in his speech.
The government incurred a deficit of SR367 billion ($97.9 billion) or 15 percent of gross domestic product in 2015, officials said. The 2016 budget plan aims to cut that to SR326 billion.
Next year’s budget projects spending of SR840 billion, down from SR975 billion actually spent this year. 
The ministry said it would review government projects to make them more efficient and ensure they were necessary and affordable.
Revenues next year are forecast at SR514 billion, down from SR608 billion in 2015, when oil revenues accounted for 73 percent of the total. 
The Brent oil price averaged about $54 a barrel this year but is now around $37.
Prominent Saudis from various sections of society welcomed the national budget, describing the announcement as balanced and based on solid foundations supporting ongoing development projects.
Fahad Alturki, chief economist and head of research at Jadwa Investment, told Arab News: “Despite the global environment of lower oil prices, the Kingdom has maintained a high level of spending in the 2016 fiscal budget. Education and health care remain the focus of government spending, accounting for 35 percent of total spending.”
He said: “Despite being reduced slightly, budgeted spending is set to play a vital role in supporting the economy in 2016.”
The budget allocates SR191 billion to education while SR213 billion will go to “military sectors.” 
Separately, nonoil revenues increased by 29 percent to SR163 billion.
This is the first budget announcement since King Salman’s ascension to the throne and is expected to reflect reforms he announced last week.
“Our vision for economic reform is to increase the efficiency of public spending, utilize economic resources and boost returns from state investment,” he told the Kingdom’s Shoura Council on Wednesday.


Gulf defense spending ‘to top $110bn by 2023’

Updated 15 February 2019
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Gulf defense spending ‘to top $110bn by 2023’

  • Saudi Arabia and UAE initiatives ‘driving forward industrial defense capabilities’
  • Budgets are increasing as countries pursue modernization of equipment and expansion of their current capabilities

LONDON: Defense spending by Gulf Arab states is expected to rise to more than $110 billion by 2023, driven partly by localized military initiatives by Saudi Arabia and the UAE, a report has found.

Budgets are increasing as countries pursue the modernization of equipment and expansion of their current capabilities, according to a report by analytics firm Jane’s by IHS Markit.

Military expenditure in the Gulf will increase from $82.33 billion in 2013 to an estimated $103.01 billion in 2019, and is forecast to continue trending upward to $110.86 billion in 2023.

“Falling energy revenues between 2014 and 2016 led to some major procurement projects being delayed as governments reigned in budget deficits,” said Charles Forrester, senior defense industry analyst at Jane’s.

“However, defense was generally protected from the worst of the spending cuts due to regional security concerns and budgets are now growing again.”

Major deals in the region have included Eurofighter Typhoon purchases by countries including Saudi Arabia and Kuwait.

Saudi Arabia is also looking to “localize” 50 percent of total government military spending in the Kingdom by 2030, and in 2017 announced the launch of the state-owned military industrial company Saudi Arabia Military Industries.

Forrester said such moves will boost the ability for Gulf countries to start exporting, rather than purely importing defense equipment.

“Within the defense sector, the establishment of Saudi Arabia Military Industries (SAMI) in 2017 and consolidation of the UAE’s defense industrial base through the creation of Emirates Defense Industries Company (EDIC) in 2014 have helped consolidate and drive forward industrial defense capabilities,” he said.

“This has happened as the countries focus on improving the quality of the defense technological work packages they undertake through offset, as well as increasing their ability to begin exporting defense equipment.”

Regional countries are also considering the use of “disruptive technologies” such as artificial intelligence in defense, Forrester said.

Meanwhile, it emerged on Friday that worldwide outlays on weapons and defense rose 1.8 percent to more than $1.67 trillion in 2018.

The US was responsible for almost half that increase, according to “The Military Balance” report released at the Munich Security Conference and quoted by Reuters.

Western powers were concerned about Russia’s upgrades of air bases and air defense systems in Crimea, the report said, but added that “China perhaps represents even more of a challenge, as it introduces yet more advanced military systems and is engaged in a strategy to improve its forces’ ability to operate at distance from the homeland.”