JEDDAH: The 2010 budget has been well received by experts as well as the general public. They have generally expressed confidence in the strength of the Saudi economy by saying that the projected deficit would “in fact go down” at the end of the year as it happened in the case of 2009.
And at least two business houses said on Tuesday that Saudi Arabia was most likely to post a surplus despite announcing a deficit budget. They predicted that public income would far exceed budget estimates.
The 2010 budget, presented on Monday, projected expenditures at SR540 billion and revenues at SR470 billion, thus showing a deficit of SR70 billion. It has been described as the largest budget in Kingdom’s history with the allocation of SR260 billion for new welfare projects and SR137 billion for education.
As Saudi Arabia has an oil-dependent economy, the revenue during the year would depend on income from oil. “It is very difficult to target a specific oil price for the entire year. There are many factors much beyond the control of budget makers in Saudi Arabia. However, Saudi Arabia has traditionally been taking a very conservative view of all market prices while making the annual budget. And the same appears true for this year’s budget,” said Syed Rashid Husain, an oil analyst.
He said most estimates say that the budget makers have calculated oil at below $50 a barrel while oil markets are expected to be considerably firmer than the projected income.
“Therefore, in all probability the budget deficit would in fact go down when actual deficit is calculated at the end of 2010,” he said.
Riyadh-based Jadwa Investment predicted a surplus of SR13 billion in 2010 based on its estimates that the Saudi government normally exceeds budgeted spending by more than 20 percent. Kuwait’s Global Investment House, however, forecast Saudi Arabia would most likely post a budget surplus of SR109 billion because of the Kingdom’s conservative estimates of oil income. Jadwa expects 2010 revenues to end up at about SR712.5 billion while Global said they could top SR750 billion.
Commenting on the SR35 billion allocated to universities in the new budget, Dr. Halim Hamid Redhwi, professor of chemical engineering at King Fahd University of Petroleum and Minerals (KFUPM), said it was a clear indication of the Kingdom’s commitment to higher education and to meet new economic challenges and diversification of the Kingdom’s economy using university resources.
“This budget clearly reflects the recognition of university’s intellectual capital and the capacity to innovate and commercialize new high technology processes and products by providing funds for developing university research and technology parks,” he said.
Redhwi was of the opinion that KFUPM’s Dhahran Techno-Valley (DTV) and Riyad Techno-Valley (RTV) of Riyadh’s King Saud University can step-up their activities during coming fiscal years as a result of visionary higher budget allocations to the universities. Redhwi, who is also an executive of DTV, maintained that the dream of knowledge-based economy in the Kingdom is now very much in sight by this high level of budget allocation to universities.
Husain Ali Al-Shehabi, technical representative of a British paint company in Jeddah, said he liked the budget because it stresses on the technical training of Saudis. “We rarely find skilled Saudis in technical fields. More training institutes and colleges would ensure better job prospects for Saudis,” he said.
Ali Jifri, a schoolteacher, was pleased with the budget because he saw a better chance for his son getting a respectable job.
Tariq Azam Ali, sales manager in a leading trading company in Jeddah, said experts were already predicting 2010 to be prosperous. Now with the expansionary provisions of the budget, the prediction could hold true.
