According to some banks, the Kingdom’s public debt stands at SR650 billion ($173 billion) which is 94 percent of the country’s GDP for 2002. The sources of the borrowed money are as follows: SR235.7 billion in bonds issued to contractors for delayed government payments, SR120 billion borrowed from local banks, SR137.9 billion from the state employees pension fund, SR68.4 billion from the Social Insurance Corporation, SR54.8 billion from other funds and corporations and SR37 billion in certificates to farmers for delayed payments.
Some studies predict the deficit will continue for several years to come, which calls for concerted efforts. This is very true. Withdrawing these amounts from the market while at the same time denying the private sector benefit from the resources means development is severely affected. All over the world, cash is utilized through investment channels and since the private sector bears the burden of providing jobs for Saudis, in addition to the creation of an additional 200,000 new jobs every year, we see the need for additional means of financing to enable the private sector to play the role required of it.
The private sector requires huge amounts of money for projects that provide jobs. However, since the government has become a major competitor and is able to secure large amounts, this makes it very difficult for the private sector to have the money needed for even small and medium projects. Government bonds issued to contractors as well as loans from commercial banks should have been directed instead to the private sector. This should also have been followed with a strategy governing bank activities to make them compatible with development needs. What is required are specific measures to streamline the borrowing — with priority going to projects to boost Saudi exports and create more jobs for Saudis.
A glance at the Kingdom’s balance of payments will reveal a serious discrepancy that must be addressed in a five-year plan to arrive at the point of equilibrium and move away from dependence on oil revenues. Oil is a non-renewable commodity that will disappear at some point. We have to consider our future seriously and prepare ourselves for the post-oil era. I suggest the creation of a special fund to settle the debts with money earned from oil priced at more than $17 per barrel going to this fund. The government should base its budget on $17 per barrel while working to curb public spending. It is quite disturbing to realize that the debt service alone amounted to 15 percent of 2002 expenditures. The time has come for some decisive action.
Arab News From the Local Press 8 April 2003
