The fiscal management of Saudi Arabia’s economy can be best described as one of continuity predicated on a huge development project the country undertook over the past several years to modernize.

Saudi Arabia has demonstrated discipline and commitment prior to the 2008 global financial crisis and after which it stands out as an exemplary case among the G20.

Continuity is prevalent if we refer to the 2005 budget when Saudi Arabia was already spending 25 percent of its budget toward education, referred to it by the government as “Human Resource Development”.

The words defining the Kingdom’s task on the education front is truly resource development and skills empowerment. It is actually a veritable task involving the resource development in a country where policymakers know all too well that education is the top priority, not simply a priority.

In 2005, the education budget of Saudi Arabia amounted to SR70 billion, in the 2011 budget it amounts to SR150, an increase of more than 100 percent. Policymakers are well aware that the country has two strategic resources, one deep in the ground, the other on the ground.

The former is hydrocarbons, which undoubtedly provide needed revenue. Without it, Saudi Arabia would not be able to continue its development and modernization program.

However, the Kingdom has been investing considerable amounts of capital toward empowering its young generation with educational skills, because what it has above ground, is its real future.

Without the right education the country cannot diversify away from oil. Some would say that diversification is already hard, yet Saudi Arabia and its policymakers have the know-how and it is not absent from addressing the challenges.

Saudi Arabia’s economy has changed a lot over the last few years, in terms of size and capacity. Back in 2003 it was a $213 billion economy, today it has more than doubled. Few countries have the ability to double in size in the space of six years. Within the same period, however, the country’s actual budget has grown from $69 billion to $170 billion, a near threefold expansion. As per capita incomes shrink in many euro zone economies, Saudi Arabia since 2003 had been able to nearly double its own.

Macroeconomic prudential management is as important as having the revenue and resources to deploy. Without taking the right steps to save for a rainy day, pay off your outstanding debts and invest wisely for a sustainable return, you will not be able to meet and manage your development commitments. This is exactly what Saudi Arabia has done for many years.

Rising government debt, household debt and budget deficits have come to describe more recently most advanced economies, as well as some GCC economies. Saudi Arabia stands above the rest in many ways defying the trend, not merely due to its income but due to its careful management. It is easy to splurge in good times as some GCC countries have demonstrated, some still do, as households did in the US, the UK and Ireland, just to name a few.

Saudi Arabia’s government to debt GDP has fallen from 103 percent in 1999 to 10.2 percent in 2010. Not a lot of countries have managed to bring down debt to GDP in such a short period of time.

In fact, most OECD countries managed to raise their debt during the same period, making Saudi Arabia stand among a very humble but limited club of macro-prudent nations. Household debt is among the lowest in the GCC and Saudi Arabia has shown fiscal resilience to maintain its investment commitments due to its ability to tap into its foreign asset pool, managed prudently by SAMA.

Banks are at the core of the global financial crisis. Banks in Saudi Arabia do not risk any of the exposure, pitfalls and concerns that their international colleagues face in many of the OECD countries.

The above are not statements of a panacea. Saudi Arabia’s labor market is at the core of the challenge, but without proper skills provided by an empowered and properly educated Saudi work force, the challenges would simply mount. The policymakers of this country are aware of the challenges that lie ahead.

The tendency from the outside world is often to underestimate Saudi Arabia’s potential and its policymakers abound. But it is one thing to live in denial and totally different to keep on persevering with a development agenda that ensures continuous commitment.

— John Sfakianakis is chief economist at Banque Saudi Fransi, Riyadh.