In December, the Kingdom drafted its 2010 budget with a gap of SR70 billion and spending of SR540 billion. "Our expectation is ... there will be a rise," Al-Assaf told Al Arabiya television on Saturday when asked whether expenditures would be higher than budgeted.

The reason for this, he said, includes projects such as those at the Grand Mosque in Makkah. Al-Assaf said it is too early to say whether the Kingdom, a member of the world's leading economies or G20, would forecast a deficit, but added the situation seems to have improved.

"There is still some time left till the end of the year, but at this time things appear better than what we had estimated at the beginning of the year," he said without elaborating.

“Saudi Arabia's economy is on a solid growth path supported by the government's investment program. There is no doubt that the economy this year will show very positive signs and nonoil growth will particularly remain high. All of this has to be contextualized, the US economy is recovering slowly, the euro zone is fiscally consolidating and Japan is suffering,” said John Sfakianakis, chief economist at Banque Saudi Fransi.

He said Saudi Arabia has weathered the storm and is now building its future via the investment projects it has undertaken since 2008. Government spending will remain high and even if there is a small deficit this year it can be very easily financed. The only downside risk is the price of oil but with oil above $80 risks are contained.

Analysts polled by Reuters expect the Saudi economy to grow by 3.8 percent this year, up from 0.6 percent in 2009.

The Jeddah-based National Commercial Bank (NCB) said in its latest report that Saudi Arabia will see real GDP growth expand by 3.7 percent in 2010 and 4 percent in 2011, as the expansion in the oil sector is projected to complement the nonoil sector’s continued positive contribution to overall growth.

The ninth five-year development plan (2010-2014) will usher in a new era of further support to the nonoil sector. The plan will witness the government allocating SR1.44 trillion for myriad projects that span infrastructure and human development, which is 67 percent higher than the previous plan. Accordingly, growth in the real nonoil sector is expected to accelerate at a significant 4.4 percent in 2010 after posting 3.8 percent in 2009.

The increase in oil revenues will prop up the fiscal and current account balances to register 5.2 percent and 10.8 percent out of GDP, respectively. Real GDP growth is expected to rise by 3.7 percent, largely driven by the vibrant nonoil sector and partially due to the increase in oil production level, the NCB report said.

In 2009, both the fiscal and current account balances fell from the previous year, posting a deficit of SR45 billion and a surplus of SR85 billion, respectively. The Kingdom is well placed amidst an uncertain global economic outlook to weather any possible negative external demand shocks, with low levels of domestic debt and foreign reserves at exceptionally comfortable levels.

— With input from agencies