RIYADH, 15 April 2004 — New figures released after a study of the economy for the first quarter of 2004 show that in spite of massive efforts to boost Saudization, unemployment among Saudi males remains at 13 percent, up 0.5 percent in the first quarter of this year.
The cost of living registered a 1.5 percent increase during the same period, up from 0.5 percent last year. The positive news from the report was for the private sector which is projected to grow from four percent to 4.5 percent following growing consumer demand and business investment.
The study conducted by Brad Bourland, chief economist at Samba, states that the surge in oil revenues will lead to twin surpluses, SR20 billion in the government budget and SR58.1 billion in the current account, both revised upward from the previous forecast by the bank.
“The non-oil private sector will grow by 4.5 percent versus our earlier forecast of four percent. In 2003, the private sector grew by 3.4 percent, below the average of 3.9 percent of the previous six years. We detect a higher level of business confidence and investment and consumer confidence in this first quarter than seen during 2003,” said Bourland.
He said despite the upswing in the market, the economy has been characterized by the “continued fiscal stresses of high debt and high levels of current expenditures, mainly on salaries for government workers, in the government budget.”
According to another study conducted by the Riyadh-based Consulting Center for Finance and Investment, every new-born Saudi carries a debt of SR27,000 due to mounting government debt of SR660 billion, equal to 83 percent of the GDP.
Describing it as “a major concern,” the CCFI report said bloated bureaucracy, security concerns (which account for 19.6 percent budget blowout) and the implications of joining the WTO, besides health care, human resources development and education, have exerted enormous pressure on government spending.
The study points out that the actual current expenditures reached 88 percent of the total spending this year and are budgeted to be close to 82 percent next year. “The prime reason for the build-up of current expenditure is due to the bulging government size. The salaries alone constitute 60 percent or SR138 billion of total expenditure.”
Referring to the male unemployment among Saudis, the Samba report points out that it has gone up from 7.60 percent in 1999 to 13 percent in the first quarter of this year. The unemployment rates went up progressively to 9 percent in 2000, 10.50 percent in 2001, 11.90 percent in 2002 percent and 12.50 percent last year.
The expatriate population during the same period rose from 5.02 million to 5.7 million, indicating that the Saudization drive has not picked up the required momentum.
As for the rise in the cost of living from 0.50 percent to 1.50 percent in the first quarter cited by Bourland, the CCFI study explains that this is due to the reduction in subsidies from SR6.6 billion this year to SR5.7 billion next year.