JEDDAH, 24 August 2005 — Saudi Arabia’s public debt, which was estimated at SR610 billion in the beginning of 2005, would be brought down to less than SR600 billion by the end of the year, Finance Minister Ibrahim Al-Assaf said yesterday, emphasizing the government’s policy to reduce its internal debts as far as possible.
“Last month we paid part of these debts and by the end of this year the public debts will be less than SR600 billion,” the minister told Saudi Television. “We’ll know about the outstanding debt only at the end of the year,” he added.
The Kingdom had to borrow money from Saudi banks and other financial institutions to meet huge expenditures during the Gulf War to liberate Kuwait.
Al-Assaf spoke about financial allocations made by Custodian of the Two Holy Mosques King Abdullah from this year’s surplus budget for various welfare projects in education, health, housing and other sectors. He hoped that the increase of the Industrial Development Fund’s capital to SR20 billion would boost both domestic and foreign investments in the country.
Although many including economists fear the increase in salary and public spending would shoot up prices of consumer goods and services, Al-Assaf said the increase of prices would be “very limited” in an open economy like the Kingdom. He called for monitoring the market to prevent exploitation of the situation.
Abdullah Al-Maghlouth, an economist, said the salary hike would encourage companies and industries to increase prices of their products and services, causing inflation. He urged the government to lower charges of electricity, water, petrol and gas to reduce the burden on the public.
