The plan has given human development the biggest share, he said, adding that the program included in the budget will provide more job opportunities and reduce unemployment by 2014 to five percent, which is an acceptable percentage even in developed countries. He said the budget specified a major share for scholarships, which is part of human development and which the country was trying to achieve. “The surplus will ensure the suitability and continuity of development projects until the next fifth development plan without any loan,” he added.
Saudi economist Abdullah Al-Alami said the budget reinforces the fact that the largest Arab economy and member of the G20 remains strong. “It's great news that Saudi Arabia expects the revenues in 2011 to come to SR540 billion. It is even better news that there are plans to spend SR580 billion, although we expect a deficit of SR40 billion,” he said.
Al-Alami said Saudi Arabia was fortunate to have accumulated huge reserves during a six-year oil price boom. “This is the time to allocate more funds to upgrade infrastructure, including airports and roads. This is also the time to allocate funds for health and education,” he said.
Khalid A. Al-Abdulkarim, CEO of the Alkhobar-based Al-Abdulkarim Holding Co., described the budget as fantastic news. “This will generate optimism and help immensely in job creation,” he said. More importantly, he felt, this particular budget will help bring in greater foreign investment. “All the world's eyes are on us; everybody is looking at Saudi Arabia as the best investment place; the budget will only reinforce their confidence,” he said. Al-Abdulkarim welcomed the special focus on health and education. “This will delight all citizens, and the allocations are in line with the Kingdom's long-term policy of making ours into a knowledge-based economy,” he said. “Any budget that creates cheer all around is simply a great budget. This one is the best example.”
According to Mohamed Ramady, visiting economics professor at King Fahd University of Petroleum and Minerals, the overall thrust of the 2011 budget was some expenditure rationalization while building up the country's liquid reserves. Ramady said: “The 2010 budget surplus of SR110 has taken most analysts by surprise as the ball mark was plus or minus SR20 billion and to achieve such a large budget surplus indicates that there has been reigning in of some government expenditures to ease back on inflationary tendencies, aided by the windfall gains from higher oil prices. Overall though, the reduction of government domestic debt to around 10 percent of GDP puts the Kingdom in an enviable position to issue long-term international sovereign debt at extremely fine pricing if it wishes to test the markets, and institutions such as Saudi Aramco and Saudi Basic Industries Corporation have indirectly benefited for their own international borrowings.”
Ramady believes that once again the 2011 budget underestimates both the revenue and expenditures of the Kingdom and that the final expenditure levels will be larger than the budgeted SR580 billion given that actual expenditures were at SR626 billion for 2010. He added that “the breakeven oil price benchmark is now around $55-58 a barrel, and oil prices are expected to remain at the $75-85 band level for 2011. Second, for the private non-oil sector to achieve the targeted growth rates of around 3.7 percent, the level of bank lending has to increase in 2011, with special emphasis on the small and medium enterprise sector for employment generation.”
— With input from Siraj Wahab, Galal Fakkar and Sultan Al-Tamimi
