RIYADH, 16 December 2003 — To coincide with the announcement of the new budget, the Ministry of Finance yesterday published a review of government revenues and expenditure for 2003 and 2004.

• The outcome for fiscal year 1423/1424 (2003)

The Ministry of Finance expects revenues of SR295 billion and expenditure of SR250 billion in 2003. There have been some increases in expenditure related to the regional and domestic security situation in 2003, and to settlement of some late payment. The remaining revenue is used to retire part of the domestic debt.

• The national budget for 1424/1425 (2004)

Main features of the budget: Total revenues for fiscal year 2004 are projected at SR200 billion.

Government expenditure is budgeted at SR230 billion.

The budget for next year includes new projects amounting to SR41.6 billion, mostly in education, health, social development, roads, municipalities and water services.

• Appropriations

Annualized appropriations for main development and public services for 1424/1425 (2004) are as follows:

SR63.7 billion for education, including technical and vocational training.

SR24.3 billion for health services and social development.

SR8.6 billion for municipality services.

SR7.3 billion for transportation and telecommunication.

SR15.1 billion for other infrastructural developments, especially in the water, industry and agriculture.

• Specialized development institutions and government financing programs

The specialized development institutions (the Industrial Development Fund, the Agricultural Bank, the Real Estate Development Fund, the CreditBank, and the Public Investment Fund) will continue to be active in providing credits to projects and services in the areas of industry, agriculture, and real estate. These credits are projected to reach SR10.6 billion in 2004.

The new budget also includes appropriations for government lending programs for private universities, colleges, and schools, as well as a program for loan guarantees for small and medium enterprises (SMEs).

The program will be implemented by the Industrial Development Fund and the guarantees will be provided by the Ministry of Finance and local banks.

• Economic developments in 2003

1) Gross domestic product: GDP is estimated to have grown by 12 percent in current prices and 6.4 percent in constant prices in 2003, reaching SR792 billion. The increase in oil prices and quantities was a major contributing factor because the oil sector was expected to have grown by 22.9 percent in current prices.

Private sector GDP is estimated to have grown by 3.7 percent in current prices and 3.4 in real terms. The non-oil industrial sector is estimated to have grown by 3.9 percent; construction sector by 2.8 percent; electricity, gas and water by 6.2 percent; transport and communication by 4.3 percent; and wholesale, retail, restaurants, and hotels by 4.4 percent in real prices.

The robust growth in the private sector has been accompanied by a number of factors enhancing confidence in the national economy and should continue to have a positive impact on private sector growth. Among these factors are the sovereign credit rating by Standard & Poor’s to the Kingdom (with A+ for long-term local currency and A for long-term foreign currency grades), the GCC customs union, the signed and upcoming agreements on natural gas exploration, private sector involvement in the power and water projects, and the IPO of part of the Saudi Telecommunication Company’s shares.

2) General price level: Inflation, as measured by the cost of living index, is estimated to have increased by 0.51 percent in 2003, while the non-oil GDP deflator has shown a small increase of 0.29 percent.

3) Balance of payments: According to Saudi Arabian Monetary Agency’s preliminary data, current account is estimated to have recorded a surplus amounting to SR101.9 billion in 2003 compared to SR44.5 billion in 2002. Non-oil exports are estimated to have grown by 1.6 percent in 2003, totaling SR33 billion and representing 10 percent of total exports.

4) Money and banking: The government’s financial and monetary policies continue to be governed by the objective of maintaining stable prices and exchange rates. The broad money supply during the first 10 months of 2003 grew by 4.2 percent compared to 11.8 percent in the same period in the previous year. With regard to the banking sector, bank deposits recorded a growth of 4.5 percent during the first 10 months of 2003, and total banks claims on public and private sectors increased by 12.3 percent, with capital and reserves increasing by 2.9 percent and profits rising by 7.4 percent in the same period.

5) Stock market: As a result of the partial sale of STC shares and the substantial improvements in economic activity and investment environment, the stock market continued to improve during 2003. The National Share Index stood at 4384 as of Dec. 11, 2003, compared to 2518 at the beginning of the year, an increase of more than 74 percent. Value of shares traded amounted to SR537 billion at the end of November, 2003 compared to SR134 billion in 2002.

• Appropriations for 2004

The General Organization for Seaports SR1.5 billion, Saudi Arabian Airlines SR12.58 billion, Grain and Silos SR1.168 billion, Desalination SR2.35 billion, Railways SR143.3 million, Royal Commission for Jubail and Yanbu SR265.6 million, Saudi Specifications Organization SR98.3 million, General Investment Authority SR80.26 million, King Saud University SR2.42 billion, King Abdul Aziz University SR1.5 billion, King Fahd University for Petroleum and Mineral Resources SR621.59 million, Imam Muhammad ibn Saud Islamic University SR1.17 billion, Islamic University in Madinah SR309.77 million, King Faisal University SR867.47 million, Umm Al-Qura University SR672.7 million, King Khaled University SR469 million, Madinah University SR179.99 million, Qasim University SR308.8 million, Taif University SR121.86 million, General Organization for Technical Education and Vocational Training SR2.88 billion, King Abdul Aziz City for Science and Technology SR515.67 million, Institute of Public Administration SR201.53 million, Saudi Red Crescent Society SR339.55 million, General Organization for Military Services SR773.93 million, Saudi Geological Survey SR111.27 million, Supreme Commission for Tourism SR149.62 million, Telecommunication and Information Technology Authority SR100 million, General Food Authority SR25 million and Pensions Fund SR32.73 billion.