The Kingdom’s new budget has rightly been described as visionary. There is a clear determination to channel extra oil income into investments which will underpin future economic development — especially investments in young people. Coming so soon after the OIC conference in Makkah highlighted education as a core need in the Muslim world, the government’s allocation for education and training of fully 26 percent of a record budget is most welcome.
Economists also approve of the further reduction of government debt to SR 475 billion by the end of 2006 and point to the conservative financial predictions that underscore the new spending plans. Planners have done their calculations based on a figure of $35 for a barrel of oil, which almost certainly means that at year end the budget surplus will exceed this year’s SR 214 billion which was itself SR 2 billion more than expected. There is also general approval for the continued encouragement of the private sector which this year won almost 3,000 contacts worth in excess of SR40 billion. The major capital investments in new places of learning, welfare centers and the infrastructural work on Jubail-2 and Yanbu-2 are certain to mean even more work going to the construction and services sector, further stimulating an economy in which 2005 GDP growth is likely to close at 22.7 percent.
Unveiling the budget, Custodian of the Two Holy Mosques King Abdullah urged ministers and officials to act with speed. There is certainly a need for the bureaucracy to accelerate its procedures and act more efficiently and effectively. At the same time, the investment of such substantial sums represents, from both a logistical and economic point of view, a formidable challenge. Saudi companies by themselves could not handle such a volume of projects. It is fortunate therefore that with WTO membership, clearer avenues now exist for foreign firms to participate as partners or to stand alone as contractors. There will also be considerable opportunity for smaller local businesses to gear up for some of the less complex projects. When the Capital Markets Authority has fostered the creation of a corporate bond market, Saudi firms will be able to raise all-important working capital more cheaply and for longer terms than bank money.
For education and health officials, there is also a clear need to complete as rapidly and as thoroughly as possible the advance arrangements for staffing and running all the new institutions. Three new universities, three new university teaching hospitals, three new technical colleges, 2,700 new schools, 15 vocational centers and 440 primary health care centers throughout the country are going to make very substantial demands indeed in terms of required staff. Bricks and mortar by themselves do not a place of learning make. Important as the facilities are, even more important is the quality of the teachers — and good teachers do not grow on trees. Each new educational establishment, whatever its level, should be aiming to turn itself into a center of excellence. This visionary budget has provided the money which must now be spent prudently in order to make the vision a reality.
