MAKKAH, 28 November 2002 — Saudi Arabia yesterday announced its new national budget for 2003, showing an increase in expenditure and reduction in the deficit.
The budget projected expenditure at SR209 billion ($55.7 billion) and revenue at SR170 billion ($45.3 billion), leaving a SR39 billion ($10.4 billion) deficit compared to SR45 billion ($12 billion) last year.
A special session of the Council of Ministers, chaired by Custodian of the Two Holy Mosques King Fahd, endorsed the budget.
Addressing the budget session, King Fahd said the expenditure earmarked in the new budget was SR7 billion more than the previous year.
A Royal Decree, carried by Saudi Press Agency, authorized the Finance Ministry to borrow to cover the deficit but it did not say if the loans would be sought locally or from foreign financiers.
The Kingdom’s domestic debt is estimated at about $180 billion. Finance and National Economy Minister Ibrahim Al-Assaf said earlier this month that the Kingdom’s planned sale of stakes in big public firms would reduce its debt burden.
"The budget has been prepared with the aim of continuing the development programs...and improving the citizens’ living standards," the king said, adding that there will continue to be a rationalization of all.
The budget gives priority to education, health, social development and infrastructure projects. It allocates more than SR22 billion for ongoing and new projects.
The current year’s budget projected expenditure at SR202 billion and revenues at SR157 billion. For the year 2001, the Kingdom reported a balanced budget of SR215 billion.
In the year 2000, the country reported a SR22.7 billion budget surplus — the first in two decades.
The Ministry of Finance and National Economy predicted that the gross domestic product (GDP) for the current fiscal year will be SR695 billion, up 2.3 percent from last year. In real terms, the growth is estimated at 0.74 percent, totaling SR644 billion.
The ministry announced a 36.3 percent surge in revenues for the current year to SR214 billion ($57 billion) from the projected income of SR157 billion ($41.9 billion).
Actual expenditures for the current year also rose 10 percent to SR222.2 billion ($59.2 billion) from the projected expenditure of SR202 billion ($53.9 billion).
This has cut the projected $12 billion deficit to just $2.2 billion. The hike in revenues is attributed to a 30 percent increase in oil prices over the projected $16-17 a barrel.
The Kingdom announced last month a major privatization program by opening up 20 vital sectors for local and foreign investors in a bid to generate billions of dollars to pay for a staggering public debt of $180 billion.
The ministry added that the private sector will achieve a growth rate of 4.2 percent this year in real terms (3.7 percent in current prices).
The non-oil industrial sector is estimated to have grown in the last year (2002) by 5.7 percent, the communication and transport sector by 7.1 percent, and the electricity and water and gas sector by three percent. "In the last budget the education sector was allocated funds for the construction of hundreds of schools and a large number of colleges for both boys and girls. Supplementary to this program, we have now allocated in the new budget SR57.5 billion for the education sector," the king said.
"The program aims at increasing the number of places at universities and colleges to accommodate the growing number of secondary school graduates, establishing vocational training centers and building new schools and colleges in all parts of the Kingdom," he added.
King Fahd said the new budget allocates SR23.23 billion for healthcare and social development. This will cover the construction of new hospitals with 100 to 300 beds in various parts of the country and the expansion of existing health facilities. The budget has allocated SR7.52 billion for municipal projects, SR6.535 billion for transport and communication, and SR13.85 billion for water, industrial, agricultural and other projects.
"One of the main features of this budget is that we have made allocations for the new Water Ministry," the king said. The budget has allocated SR3.4 billion for new drinking water and sewage projects.
"The budget will strengthen social care programs," King Fahd said in his address, which was read out on his behalf by Abdul Aziz Al-Salim, secretary-general of the Cabinet. He said that the government was currently implementing development projects worth more than SR90 billion.
King Fahd cited "remarkable improvement" in the country’s economic performance in the current fiscal year, showing a continued surplus in the balance of payment, an increase in liquidity, a stability in prices and no change in the exchange rate of the Saudi riyal.
"National banks also showed a healthy performance in terms of profits, solvency, provision of loans and financial facilities to both public and private sectors," he pointed out.
King Fahd stated that the excellent economic performance coincided with the government’s efforts to achieve the goals of comprehensive development strategies.
He said that the government has established special agencies and approved new rules and regulations to create a suitable atmosphere for economic diversification, to activate the role of the private sector in development, to create new jobs for Saudis, to achieve better utilization of resources and to attract domestic and foreign investment. "Creating new job opportunities for Saudis will continue to be a principal government goal," the king said.
In this respect, he referred to the government’s efforts to establish the Manpower Development Fund and its support for the education sector and small and medium-scale organizations and projects. "We have also directed the private sector to Saudize selected jobs," he added.
King Fahd said that state-run lending organizations will continue to provide loans to construct industrial, agricultural and real estate projects. The king urged all ministers and government officials to provide better services to both Saudis and foreign residents.
