JEDDAH: Finance Minister Ibrahim Al-Assaf said yesterday that Saudi Arabia would be able to meet its SR65 billion deficit in the 2009 general budget from state reserves accumulated as a result of rising oil prices during the past three years.
Speaking to Saudi Television, he said the SR1.1 trillion revenue earned by the Kingdom in 2008 would strengthen the government’s ability to spend on development projects in the next two years, even if oil prices fall further.
Custodian of the Two Holy Mosques King Abdullah announced the Kingdom’s largest-ever budget on Monday, projecting expenditures at SR475 billion and revenues at SR410 billion.
Al-Assaf said the Kingdom would continue to provide the 5 percent inflation allowance to government employees this year.
“Subsequently, they will receive a 5 percent increase in salary from the beginning of 2009,” he said. Al-Assaf estimated the Kingdom’s monetary reserves at SR1.4 trillion. “These reserves are safe as they are invested in secure tools,” he added. “Our monetary policy aims at creating suitable financial reserves to face emergencies and challenges.”
The new budget has allocated a record SR122 billion for education and training. “Saudi Arabia has been listed among the top 10 countries that have the highest spending on education in comparison with their gross domestic product,” he said.
The minister said the government had approved new projects worth SR718 billion in education, water and infrastructure during the past four years. The new budget has allocated a massive SR225 billion for new projects. “The figure will be much higher if we add up those projects implemented with private sector partnership.” Al-Assaf highlighted the Kingdom’s support to poor countries and international development organizations. “Our foreign aid accounts for 1.25 percent of the GDP, which is much higher than the UN target of 0.7 percent,” he added.
He said the Kingdom has devised its monetary, financial and investment policies to reduce the impact of global financial crisis. “Our GDP grew by 4.2 percent this year while most countries in the world were affected by the crisis.”
In a statement on the occasion, Health Minister Dr. Hamad Al-Manie said Saudi Arabia has won the 22nd position in the world in health spending. The new budget has allocated SR52 billion for health services and social development.
Saudi businessmen reacted positively to the budget, saying it would boost the Kingdom’s development. “The huge budget as well as the government’s assurance on continued spending on development and infrastructure projects have enhanced private sector confidence,” said Abdul Rahman Al-Rashid, chairman of Asharqiya Chamber.
Fahd Al-Sultan, secretary-general of the Council of Saudi Chambers of Commerce and Industry, said the budget reflected the strength of the Saudi economy. “The Kingdom’s GDP for 2008 exceeding SR1.7 trillion is the largest in the country’s history.”
Saad Al-Moajjel, vice chairman of the Riyadh Chamber of Commerce and Industry, said large-scale government spending on infrastructure and service projects was necessary to ward off the impact of the global crisis. He urged the government to take effective measures to increase the Kingdom’s nonoil revenues. At present, oil accounts for 90 percent of the country’s revenues. “We have to invest more money in industries to achieve this strategic objective.”
