RIYADH, 29 November 2002 — Senior government officials and representatives of the private sector gave their own perceptions of the budget announced yesterday.
Dr. Ali S. Altokhais, deputy minister for water affairs, told Arab News that the budget has recognized the need for augmenting water resources and utilizing waste water by allocating SR 3.4 billion for new drinking water and sewage projects. In the process, it has entrusted the Water Ministry with a heavy responsibility.
He said that since the Kingdom has one of the highest per capita water consumption in the world at 250 liters per day, the budget seeks to address the concerns of the population growth by rationalizing the use of water through the treatment of waste water as well as creation of additional sources of drinking water.
However, both Abdulrahman Al-Zamil, chairman of the Saudi Export Development Center, and Dr. Ihsan Buhulaigah, reputed economist and member of the Shoura Council, said it was high time the government reined in its expenditure and the recurring budget deficits.
Dr. Al Zamil said the continued budget deficit is unacceptable, since it has been adding to the debt burden.
“The government should take steps to reduce its expenditure and at the same seek to open up various sectors to investors, by giving them incentives. The role of the private sector is also not very encouraging because of government policies and its inability to keep promises. It is not a healthy situation. Our first priority should be to strive for zero budget deficit. Otherwise our economy will be in trouble.”
Dr. Al-Zamil, who is also chairman of the Al-Zamil Group, said the government should also curb its administrative expenditure incurred over public buildings. Our foreign aid policy should be reviewed. There is no need for giving foreign aid, since we ourselves are in need of aid,” he observed.
Pointing out that the actual deficit is lower than anticipated and the actual expenditure more than expected, Dr. Buhulaiqa said the SR 39 billion deficit would add another three percent to the nearly $ 180 billion debt burden.
The only viable solution, according to him, is to downsize the deficit, which would take at least a decade to wipe off. Something needs to be done to control public spending and, at the same time, generate revenues through the privatization program.
He also stressed the need for administrative reforms to make the bureaucracy slim and efficient.
In this context, he referred to Chapter 1 and 2 of the budget regarding the employees‚ salaries and the government administration and said they constitute 85 percent of public expenditure.
Only comprehensive administrative reforms could make a dent into the problem.
Dr. Buhulaiqa proposed that revenues that would accrue to the government from privatization of the 20 sectors, including the Saudi Telecom Company, should be channeled into a fund that should be mobilized strictly for overcoming budget deficits.
It should be administered by the government treasury and used only for dealing with budget deficits. The goal should be to come out with a balanced budget.
Dr. Buhulaiqa noted that the budget puts down the private sector contribution at 46 percent of the GDP as against 48 percent last year.
The growth of the non-oil exports was also sluggish at 1.2 percent, while the gross domestic product registered a growth rate of 2.3 percent (0.74 percent in real terms).
Considering the fact that the oil revenues had increased by 30 percent during the reporting period, the GDP growth rate was lower than the population growth rate or even the Seventh Five-Year Plan target, Dr. Buhulaiqa said
Regarding the prospects for next year, he said they remain overshadowed by the war clouds hanging over Iraq.
However, the Kingdom is an important player, both at the regional level and in the oil market.
“If the situation does not deteriorate, the revenues could easily touch the 2000 level,” he added.
