Even in the presence of signs that the state revenue in 2003 will contain a surplus of some SR13 billion as a result of higher than expected oil prices, the general economic picture is not necessarily encouraging.

The war on Iraq led to oil prices increasing and that had a mixed impact. While there has been an increase in state income as a result, Third World countries have suffered from recession with Muslim states being the among the hardest hit. Higher oil prices along with a weak performance in the tourist sector as a result of a decline in the number of international travelers have combined to influence a number of economies which depend on tourism for a major portion of their incomes. Not only that, but since the start of the war a number of European countries have barred their nationals from traveling to certain Middle Eastern countries.

This means a country such as Egypt, which depends heavily on tourism, will not be able to obtain the hard currency needed for its citizens to travel to Saudi Arabia for Haj. Egyptian pilgrims account for a large proportion of pilgrims coming to the Kingdom every year for Haj and Umrah.

In addition, Southeast Asian countries, which were already suffering a decline in tourism, are now seeing their situations exacerbated by the spread of the deadly SARS (Severe Acute Respiratory Syndrome).

This means the number of Haj and Umrah performers to the Kingdom from those countries will show a considerable decrease from what is normal. What will suffer most will be the Saudi hotel and hospitality sector; this sector is a vital source of income and billions of dollars in infrastructure investments have been injected into it over the past few years.

In Makkah and Madinah alone, investment in this sector exceeds SR4 billion. Hoteliers may be unable to honor their contracts which will reflect negatively on the country’s overall economic performance.

What is needed at this stage is for the government to increase expenditure, especially in development projects, and delay the repayment of public debt from any projected revenue increase.

Arab News From the Local Press 29 April 2003