Govt spending in 2014 rose by 28.7%

The government’s spending in 2014 reached SR1,100 billion, SR245 billion or 28.7 percent more than the budgeted amount of SR855 billion, according to the Ministry of Finance.
In a statement on the occasion of the announcement of 2015 budget, the ministry said that the Kingdom’s revenue in 2014 was estimated to reach SR1,046 ($278.9) billion, thus causing a deficit of SR54 ($14.4) billion.
“The increase of actual over budgeted was due to additional spending on the two holy mosques and other development and service projects as well as international aid,” the ministry said.
Preliminary estimates indicate that public debt will decline from SR60.1 ($16) billion at the end of 2013 to SR44.3 ($11.8) billion at the end of 2014, which is about 1.6 percent of GDP for the year.
The number of government projects’ contracts that have been signed with the private sector in 2014 was 2,572 with a total value of SR184 ($49) billion.
Referring to the new SR860 billion new budget for 2015, the ministry said the government would continue to focus on priority investment programs that enhance sustainable and strong economic development and employment opportunities for Saudi nationals.
The focus will be on infrastructure, education, health, security, social services, municipal services, water and water treatment services, roads and highways, with particular emphasis on science and technology projects and e-government.
“Efforts to rationalize current spending will continue, especially salaries, wages and allowances, which contribute to about 50 percent of total budgeted expenditures,” the ministry said.

Appropriations
The 2015 budget has appropriated SR185 ($49.3) billion for new and existing projects as follows:

Education
Allocation of around SR217 ($57.9) billion, representing 25 percent of total 2015 appropriations.
The new budget includes 164 new projects costing around SR14 billion ($3.7 billion) and additions to existing projects costs of about SR6.8 billion ($1.8 billion).
Spending on all projects under construction will continue across the Kingdom according to their implementation phases, with more than SR280 ($74.7) billion from previous appropriations.
For general education, the budget has earmarked money for 500 projects in order to rehabilitate existing school buildings.
It has approved 11 projects for rehabilitating existing sport centers, with an estimated cost of SR405 ($108) million.
For higher education, the new budget includes appropriations of SR12.3 ($3.28) billion for completing and renovating college campuses in several universities and opening three new universities.
With regard to the scholarship program, the ministry said the total number of students studying abroad reached over 207,000 students, including their dependents who are also supported by the government.
Total expenditure on the scholarship program is estimated at SR22.5 ($6) billion, excluding scholarships for employees of government institutions.
In addition, the budget includes several new projects that include building new vocational and technical colleges, additions on existing projects costs and a new project for operating colleges of excellence with a total cost of around SR2.4 ($0.64) billion.

Health and Social Affairs
The budget has allocated SR160 ($42.7) billion for civil and military health care services.
The budget includes new projects for new primary care centers throughout the Kingdom, three new hospitals, three blood bank laboratories, 11 medical centers, and 10 comprehensive care clinics.
At present, there are more than 117 hospitals under construction with a capacity of 24,000 beds and 8 medical cities around the Kingdom with a capacity of 14,500 beds. In 2014, 26 new hospitals with 4,500 beds were completed.
For social services, the budget made allocations for 16 sport clubs, five centers for citizens with special needs, social welfare and labor offices.
In addition, the budget includes additional support for social welfare, citizens with special needs, and poverty eradication programs, with an appropriation of SR30 ($8) billion in the new budget.

Municipality Services
Allocation of SR40 ($10.7) billion has been made for the sector, of which more than SR5.5 ($1.47) billion to be financed from the municipalities’ revenues.
The budget includes new projects and additional appropriations for existing ones amounting to around SR25 ($6.7) billion for inter-city roads, bridges, drainage and control systems.
Spending will continue on all projects under construction that have been approved on previous years, which still have around SR144 ($38.4) billion remaining in their costs, of which more than SR30 ($8) billion have been allocated for rainwater drainage and for the protection from rains floods.

Infrastructure and Transportation
Allocation of around SR63 ($16.8) billion. The budget includes new projects and additional appropriations for existing ones amounting to around SR33.5 ($ 8.9) billion allocated to build 2,000 km of roads, upgrading and modernizing existing ports and building additional berths, additional infrastructure projects in the industrial cities of Jubail, Yanbu and Ras Al-Khair, expanding and upgrading regional and international airports, and railroads projects.
Spending will continue on all projects under construction that have been approved during previous years, which still have around SR115 ($30.7) billion remaining in their costs.
A total of SR60 ($16) billion have been allocated for water, agriculture, industry and other economic sectors, the ministry said.
The budget includes new projects and additional appropriations for existing ones amounting to around SR23 ($6.1) billion for increasing water resources, building dams, desalination, utilizing deep aquifer wells, expanding and improving water and water treatment networks.
In addition to existing projects, several other projects will be implemented to develop and build the industrial cities infrastructure and services as well as new projects for building new grain silos and expanding existing ones.
Spending will continue on all projects under construction that have been approved on previous financial years, which still have around SR142 ($37.9) billion remaining in their costs.

Credit Institutions
Specialized credit institutions (Real Estate Development Fund, Saudi Industrial Development Fund, Saudi Credit and Saving Bank, Agriculture Development Fund, Public Investment Fund, and Government Lending Program at the Ministry of Finance) will continue to provide loans to support job creation and increase growth prospects.
It is estimated that more than SR73.7 ($19.7) billion will be disbursed in 2015 by these institutions.
The total financing provided by these institutions since their inception up to the end of 2014 has reached around SR587 ($156.5) billion.

Economic Developments
Referring to the economic developments in 2014, the ministry said the gross domestic product (GDP) was estimated to reach SR2,821.7 ($752.5) billion
in 2014 (in current prices, achieving a growth rate of 1.09 percent compared to 2013.
The nonoil GDP is estimated to grow by 8.21 percent, whereas the nonoil public and private sectors are estimated to grow by 6.06 and 9,11 percent, respectively, and the oil sector is estimated to decline by 7.17 percent. In real terms, GDP was estimated to grow at 3.59 percent compared to 2.67 percent in 2013.
The oil sector is estimated to grow by 1.72 percent while the government and private non-oil sectors are estimated to grow by 3.66 and 5.7 percent, respectively.
“All components of non-oil GDP recorded positive and healthy growth in 2014,” the ministry pointed out.
The nonoil industrial sector is estimated to grow by 6.54 percent; construction by 6.7 percent; transport, storage and communication sector by 6.13 percent; wholesale, retail, restaurants, and hotels by 5.97 percent; and finance, insurance and real estate by 4.46 percent.

General Price Level
In 2014, inflation, as measured by the cost of living index for 2007 base year, has increased by 2.7 percent compared to 2013, while the non-oil GDP deflator is estimated to increase by 2.99 percent.
Referring to foreign trade and balance of payments in 2014, the ministry said total exports of goods were estimated at SR1,348.4 ($359.6) billion, a decrease of 4.4 percent from last year.
Nonoil exports of goods are estimated at SR208.2 ($55.5) billion, an increase of 3.1 percent compared to 2013.
The nonoil exports of goods represents 15.4 percent of total exports.
Total imports of goods are estimated to be around SR564.1 ($150.4) billion, decreasing by 2.6 percent compared to 2013.
The trade balance surplus is estimated to be around SR788.7 ($210.3) billion, a decline of 5.6 percent compared to 2013.
The current account is estimated to register surplus of around SR399 ($106.4) billion in 2014 compared to a surplus of SR497.4 ($132.6) billion in 2013, showing a decrease of 19.8 percent.
Money and Banking
The money supply grew by 10.4 percent in the first ten months of 2014 compared to 6.6 percent for the same period in 2013. In the same period, bank deposits recorded a growth rate of 11 percent.
Total bank claims on the public and private sector increased by 13.8 percent, and banks’ capital and reserves increased by 11.1 percent reaching around SR 250.9 ($66.9) billion.

Capital Market
The Capital Market Authority (CMA) has taken a number of initiatives in 2014 to regulate the issuance of securities and develop their markets as well as enhancing fairness and transparency to protect investors and to enhance confidence in the market.
The Council of Ministers issued a Resolution No. 388 dated 21/7/2014 to allow qualified foreign financial institutions to trade listed shares, in accordance with CMA’s regulations.
Referring to economic, financial and organizational developments, the ministry said the government had taken a number of developments, initiatives and actions in 2014 to strengthen private sector confidence and achieve robust growth performance including the continued implementation for the second phase of the National e-Government Project to support the initiatives and projects for the second operational plan for the e-Government (2012-2016).
Currently, around 2,000 online services are available through the National e-Government Portal (SAUDI). Moreover, the number of government entities connected to the secure electronic network has reached 111, and the number of government entities that exchange data electronically through the government integration channel have reached 100.
Furthermore, a government electronic mail system was launched, which operates on a secure electronic platform to facilitate the exchange of transactions electronically between different government agencies.
SADAD Payment System (SADAD) witnessed the joining of four new government entities in 2014, which increased the total number of entities (government and private) connected to the system to 139 entities.
Total payments made through SADAD since its inception up to 8/2/1436H have reached SR313 ($83.5) billion, up 12 percent compared to 2013.
“The International Monetary Fund (IMF) Report in 2014 acknowledged that Saudi Arabia has been one of the best performing G-20 economies in recent years, and has supported the global economy through its stabilizing role in the global oil market,” the ministry said.
Standard and Poor’s has changed the outlook for Saudi Arabia to “stable” from “positive” but sovereign rating remained unchanged at (AA-).
Although the agency lowered the outlook for Saudi Arabia, it states that real economic growth remains relatively strong.
A similar assessment by Fitch credit rating issued last March.
The Saudi Arabian Monetary Agency (SAMA) announced the commencement of compulsory and full implementation of the Finance Companies Control Law starting 9/11/2014), after the lapse of the grace period.
New laws, regulations and systems have been approved during 2014 including: Fraud and Terrorism prevention laws, Jobless Insurance Scheme “SANED System,” Gulf Cooperation Council Trademark Law, Municipal Councils Law, Healthcare System, Feed System, Regulation of Residential support, Regulation of Medical Cities and Specialized Hospitals affiliated to the Ministry of Health, Saudi Association for Tourist Guides, Saudi Association for Tourist Accommodation, Saudi Association for Travel and Tourism and the reorganization of the Consumer Protection Association.