JEDDAH, 9 December — Saudi Arabia last night announced the 2002 state budget of SR202 billion ($53.9 billion), with a SR45 billion ($12 billion) gap. The projected revenues were SR157 billion ($41.86 billion). The deficit will be covered through borrowing, according to a statement by the Council of Ministers, which did not say whether the Kingdom will borrow locally or would tap foreign markets for loans.
The budget was approved at a special Cabinet meeting chaired by Custodian of the Two Holy Mosques King Fahd at Al-Safa Palace in Makkah overlooking the Grand Mosque.
King Fahd said the budget was intended to complement the development program approved in last year’s budget, which included education, health and social development projects.
“We were keen in this year’s budget to finalize these projects by allocating the necessary finances that would enable the implementation of the plan on schedule and move more quickly toward achieving the desired goals,” the king was quoted as saying by Minister of Information Dr. Fouad Al-Farsy. (See also Page 2)
For the year 2001 the Kingdom reported a balanced budget of SR215 billion ($57.33 billion). In the year 2000 the country reported a SR22.7 billion budget surplus, the first in two decades. This latest deficit was expected following announcements by government officials last month warning that the finances for the year could slip back into the red amid an international economic slowdown in the aftermath of the Sept.11 attacks on the United States.
Emphasis has been laid on education and health sectors with general and higher education getting SR54.3 billion and the health and social development sector SR22.8 billion.
King Fahd told the Cabinet meeting that 369 new schools and colleges for boys and girls would be built in the new year, while additional allocations have been sanctioned for refurbishing and equipping existing educational institutions. An amount of SR28 billion has been set aside for new projects, of which SR22 billion will go to education, health and social development, municipality services, water and sewage and transport and communication. New colleges for medicine and pharmaceutical studies will be opened next year, in addition to 15 new hospitals. A total of 86,000 employees will be given a permanent job status.
A statement by the Ministry of Finance and National Economy said gross domestic product (GDP) is expected to reach SR615 billion in 2001, up by 2.2 percent from last year. This was achieved despite the decline in the oil sector GDP, especially in the fourth quarter of 2001. The figure was originally projected to have reached SR668 billion, but dropped as a result of the decline in oil prices. Private sector GDP grew by 5.9 percent. Other growth sectors included the non-oil sector, which grew by 9.3 percent; the communications and transport sector, by 9.1 percent; the electricity, gas and water sector, by 4.5 percent; and construction by 3.3 percent. Inflation fell by 0.8 percent in 2001, while non-oil GDP deflators showed a slight increase of 0.8 percent. Non-oil exports grew by 4.3 percent to reach SR25.9 billion.
Last year payments of SR9.75 billion ($2.6 billion) were made to contractors, but the new budget statements made no mention of such payments.
Based on preliminary data from the Saudi Arabian Monetary Agency, the balance of payments account is estimated to record a surplus of SR31.3 billion in 2001. “This mainly reflects weakness in the world economy and its adverse impact on the oil market,” the statement said.
The appropriations for the main development and public services sectors include SR9.5 billion for municipality and water, SR6.5 billion for transport and communication, SR10.1 billion for infrastructure (including industry and agriculture, and specialized development institutions). State-run funds — including the Industrial Development Fund, Credit Bank, Agricultural Bank, Real Estate Development Fund and the Public Investment Fund — will provide loans worth SR 6.2 billion for projects and services in 2002.
A review of the state budget for the past four years indicates a continuous fluctuation in the figures, which changed from deficit to surplus to a balanced sheet and to deficit again.
The budget of 1999 posted a deficit of SR44 billion, SR1 billion less than the 2002 budget, with revenues put at SR121 billion and expenditure at SR165 billion. Revenue during that year was 32 percent less than the previous year, during which period revenues amounted to SR178 billion. In the year 2000, there was a surplus of SR45 billion. Revenues were put at SR247 billion and expenditure at SR202 billion. A year later, in 2001, there was a balanced budget, with both revenue and expenditure put at SR215 billion.
The new budget bars the hiring of new state employees outside approved jobs.
“It is not allowed to appoint or promote employees and workers except for approved jobs in the budget and according to stipulated regulations,” the budget directives said. Except for the appointment of ministers, no jobs or new ranks other than the ones approved in the budget should be created in the new fiscal year.
