JEDDAH, 20 December 2006 — Saudi Arabia’s 2007 budget aims at development of vital sectors and projects including new universities, schools, hospitals, health centers and industrial cities as well as development projects of the Grand Mosque in Makkah and other holy sites, Finance Minister Ibrahim Al-Assaf said yesterday while talking to Saudi Arabian Television Channel One.

The minister disclosed the government’s plan to cut down public debt further to reach SR310 billion, from 28 percent of the gross domestic product to 24 percent. On Monday, while making the budget announcement, Custodian of the Two Holy Mosques King Abdullah said the public debt would be brought down to SR366 billion by the end of 2006.

The 2007 budget, the largest in the Kingdom’s history, projected expenditures at SR380 billion ($101 billion) and revenues at SR400 billion ($106 billion). It was also disclosed that the Kingdom would make a record budget surplus of SR265 billion this year. The allocations made for expenditures in the 2007 budget were SR45 billion higher than that of 2006 budget.

Al-Assaf said the king has instructed all ministries and government department to carry out their new development projects in time, pointing to the formation of a ministerial committee to discuss obstacles to the implementation of projects or deficiencies in the number of contractors.

Referring to the fall in GDP growth to 4.2 percent from last year’s 6.54 percent, the finance minister said it was due to a decline in oil prices. He said large-scale expenditures on development and service projects would have a positive impact on the national economy at large.

“All sectors will benefit from these expenditures,” he said.

In his statement on the budget, Economy and Planning Minister Khaled Al-Gosaibi said the budget was aimed at improving the living standard of citizens, creating more job opportunities for them and expanding educational, health, infrastructure and service facilities. “It has also taken into consideration of the Kingdom’s development strategy focusing on manpower development,” Gosaibi said referring to large-scale allocations for education and manpower training. “The GDP growth of 4.2 percent and private sector GDP growth of 6.5 percent denotes the strength of the national economy.”

Prince Sultan ibn Salman, secretary-general of the Supreme Commission for Tourism, said the new budget would help promote tourism, as it would enhance service and infrastructure facilities in the country. He emphasized the growing role of the tourism sector in the national economy. “It will boost the economy, support diversification drive and create more jobs,” he added.

Education Minister Dr. Abdullah Bin-Obaid commended the government for allocating the lion’s share of the budget for education and manpower training. The sector received SR96.7 billion in 2007 budget, which includes provision for building 2,000 new schools, four universities including a university for girls in Riyadh.

In his comment, Health Minister Dr. Hamad Al-Manie said the Kingdom had reached 22nd position among countries in the world in health spending. He underscored his ministry’s efforts to promote health services across the country. “We have already constructed 40 new hospitals at a total cost of SR1.9 billion. We are now in the process of receiving those hospital projects from contractors,” he added. Referring to the government’s plan to establish advanced primary health care centers all over the Kingdom, he said the ministry has already signed contracts for 1,010 centers. The ministry has signed another contract to set up a national health laboratory in Riyadh at a cost of SR114 billion.

GCC Monetary Union

Al-Assaf said the GCC states may have to review the 2010 target date for introducing a single currency after Oman said recently it would not abide by the deadline. “All options are open, including the 2010 target,” he said.

Oman, one of six members of the Gulf Cooperation Council that also groups Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain, said this month it was pulling out of the Jan. 1, 2010, deadline because of delays in GCC-wide measures such as implementing a customs union agreement. “It’s better to take slower steps that are implemented than take bigger steps that some countries cannot swallow, and will perhaps lead to failure,” Al-Assaf said. Still, Saudi Arabia, which accounts for 60 percent of the GCC’s gross domestic product (GDP), is seeking to meet the 2010 deadline, Al-Assaf said.

“Given the Omani position, perhaps we need to review these steps between one extreme of having a central bank and the other of taking things step-by-step,” he said. The six states have already agreed on fiscal and economic criteria for creating the currency. “We have to go back and discuss what are the steps needed to reach it (union), how we can do it and if there are interim arrangements that we can adopt in the meantime,” the Saudi minister said.