Officials, economists and experts welcome state budget for new fiscal year

Budget confirms strong pillars on which Saudi economy stands

New budget aims to launch development, buttress economic conditions

National economy proves strong in face of global financial crises, success of development plans

A number of ministers and officials have commended the national budget amounting to SR 580 billion for fiscal year 1432AH/1433AH, noting that the budget is the largest one in the history of the Kingdom of Saudi Arabia for two consecutive years.

The Minister of Social Affairs Dr. Yousuf bin Ahmed Al-Othaimeen said the budget allocated SR 18.8 billion for developmental needs of citizens including salaries and assistance of social security, allocations for orphans and persons with special needs, as well as developmental projects.

On his part, the Minister of Civil Service Mohammed bin Ali Al-Fayiz said that in spite of unusual economic circumstances in the world, thanks to the Saudi leadership that the Kingdom of Saudi Arabia has managed its economy in maintaining a balance in governmental expenditures and not to affect negatively on the expected gains for the overall development plans in various provinces of the Kingdom.

In another statement, the Governor of Saudi Arabian General Investment Authority (SAGIA) Amr bin Abdullah Al-Dabbagh said that the budget allocated SR 157 million for SAGIA, stressing that the Authority will continue its efforts to implement the directives of the Custodian of the Two Holy Mosques King Abdullah Ibn Abdulaziz to improve the investment environment in the Kingdom of Saudi Arabia.

On his part, the Governor of Technical and Vocational Training Corporation, Dr. Ali bin Nasser Al-Ghufais said that the new budget will contribute to supporting the distinctive environment of the sector of technical and vocational training for citizens, establishing infrastructure projects for the sectors of education and training, and contributing to building more partnerships with business sectors.

Prince Abdullah bin Abdulaziz bin Musaed, Governor of Northern Border Province extended thanks to and appreciation of the Saudi leaders for their care and attention accorded to the citizens wherever they are.

In a statement to the Saudi Press Agency (SPA) on the occasion of the new fiscal year's budget, he asserted that as the largest in the history of the Kingdom, the budget will cover more development projects to be a clear evidence that the leadership is keen on the provision of the best services and facilities to the citizens.

Shoura Council Speaker Sheikh Dr. Abdullah bin Mohammed bin Ibrahim Al Al-Sheikh hailed the new budget, terming it as the budget of development which is targeting the Saudi man.

In a statement to the Saudi Press Agency (SPA) on the occasion of the new fiscal year's budget, he said that the new budget emphasizes that the Kingdom is moving forward in its balanced and sound economic policy which aims to achieve comprehensive and sustainable development, using public spending as a major tool to stimulate the economic activity and direct the resources towards uses that achieve the maximum benefits and economic and social returns.

Minister of Finance Dr. Ibrahim Ala'ssaf said the new fiscal year's budget will contribute to citizens' prosperity.

In a press statement following the cabinet's session, he reviewed the numbers of the budget saying that the Saudi economy's indications are good.

The Deputy Custodian of the Two Holy Mosques Prince Sultan bin Abdulaziz Al Saud had received at Al-Yamamah Palace the Minister of Finance Dr. Ibrahim bin Abdulaziz Al-Assaf, his deputy and assistant, and the undersecretaries of the Ministry of Finance who came to greet Prince Sultan bin Abdulaziz on the occasion of the issuance of the General Budget of the State for the fiscal year 1432/1433H.

The audience was attended by Prince Naif bin Abdulaziz Al Saud, Second Deputy Premier and Minister of Interior; and a number of princes and ministers.

Minister of Commerce and Industry Abdullah bin Ahmed Zainal Alireza extended thanks to the Saudi leaders for their attention accorded to the citizens and the advancement of all that affects their daily lives.

In a statement to the Saudi Press Agency (SPA) on the occasion of the new fiscal year's budget, he noted that the budget gives great interest in the projects and programs related to the welfare of the citizens and strengthening the economy of the Kingdom, confirming its high profile and prestigious economic position among the world's economies.

Prince Faisal bin Abdullah bin Mohammed Al Saud, Minister of Education expressed thanks to and appreciation of the Saudi leaders for their unlimited support of education sector in the kingdom.

In a statement on the occasion of the new fiscal year's budget, he said the budget will cover a number of new strategic educational projects, investment in developing the Math and Natural Science curriculum, promotion of the quality of public education as well as the focus on teachers and all other educational services and centers.

Chairman of the Board of Directors of Riyadh's Chamber of Commerce and Industry Abdulrahman Aljoraisi highlighted the strength of the Saudi economy.

In a statement on the occasion of the new fiscal year's budget, he said the budget stresses the soundness of Saudi economic course and economic reforms carried out by Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud.

Minister of Health Dr. Abdullah Alrabaiaah thanked Saudi leaders for supporting health services in the kingdom.

In a statement on the occasion of the new fiscal year's budget, he said the budget will cover a number of new specialized, general, psychological health, children and maternity hospitals as well as other health centers.

Following is the full text of the press release issued by the Ministry of Finance on the National Budget for the fiscal year (FY) 1432-1433H (2011).

'Actual Outcome of Fiscal Year 1431/1432 (2010):

The Ministry of Finance projects actual revenue to be SR 735 (US $196) billions in 2010 and actual expenditure to be SR 626.5 (US $167.1) billions. Increases in actual over budgeted expenditures in 2010 of SR 86.5 (US $23.1) billions reflect increases in expenditures as a result of the 13th month salary, increase in expenditures on projects in the Two Holy Mosques and other Mashair, implementation of new compensation system for universities faculty, adjustment in military salaries, and the cost of increased admission to universities as well as abroad scholarship program.

Total number of government projects signed with the private sector in 2010 were 2460 with a total value of more than SR 182.5 (US $48.7) billions, an increase of 26 percent over 2009.

Preliminary estimates indicate that the value of public debt will decline from SR 225 (US $60) billions at the end of 2009 to SR 167 (US $44.5) at the end of 2010, which represents (10.2) percent of projected GDP for 2010. The stock of debt is totally domestic.

The National Budget for 1432AH/1433AH (2011)

The followings are the main highlights of the 1432AH/1433AH (2011) budget:

1.Total revenues are projected at SR 540 (US $144) billions. 2.Government expenditures are budgeted at SR 580 (US $154.7) billions. 3.Fiscal deficit is projected at SR 40 (US $10.7) billions.

The national budget for 1432AH/1433AH (2011) will continue to focus on enhancing the development process and ensure that the investment programs remain conducive to strong and sustainable economic growth. The budget puts emphasis on optimizing the use of available resources and giving priority to projects that ensure balanced development as well as more employment opportunities and job creation. Specifically, focus will be on education, health, social and security services, municipal services, water and sewage services, and roads and highways. Moreover, the budget attaches a particular importance to projects related to research and development (R&D) as well as science and technology projects for the e-government.

Appropriations

The 1432AH/1433AH (2011) budget includes financing for new and on-going projects with a total value of SR 256 (US $68. 3) billions.

Appropriations for the main development and public service sectors for 1432AH/1433AH (2011) are as follows:

Education and Training:

a.Total expenditure amounts to SR 150 (US $40) billions, representing 26 percent of FY 2011 appropriations and an increase of 8 percent over FY 2010 appropriation.

b.Continued implementation of King Abdullah Bin Abdulaziz Public Education Development Project (Tatweer) amounting to SR 9.0 billion through the Education Development Holding Company owned by the Public Investment Fund (PIF).

c.New projects include 610 new schools (in addition to 3200 schools currently under construction and more than 600 schools completed in FY 2010) and rehabilitation of 2000 existing school buildings.

d.For higher education, the new budget includes appropriations for the completion of construction of campuses for the newly created universities including housing of faculty.

Furthermore, the scholarship program (first and second phase) will continue next year.

Health and social Affairs:

a.Total expenditure amounts to SR 68.7 (US $18.3) billions, an increase of 12 percent over FY 2010 appropriation.

b.Projects include new primary care centers throughout the Kingdom, 12 new hospitals. At the present, there are (120) hospitals under construction with a capacity of ( 26700) beds.

c.For social services, the new budget includes appropriation to build sport clubs, social centers, social welfare and labor offices. In addition, it includes further support for poverty reduction programs that will shorten the time frame required to eradicate poverty.

Municipality services:

a.Total expenditure amounts to SR 24.5 (US $6.5) billions, an increase of 13 percent over FY 2010 appropriation.

b.New project include inter-city roads, bridges, and road lights, which should help ease traffic bottlenecks. It also includes other environment-related projects.

Transportation and telecommunication:

a.Total expenditure amounts to SR 25.2 (US $6.7) billions, an increase of 5 percent over FY 2010 appropriation.

b.New projects include roads totaling 6600 kilometers (km) to be added to 30200 km of roads currently under construction.

Also, the budget includes appropriations to build 4 new airports and rebuilding of king Abdulaziz International Airport. In addition, the budget includes projects to build additional berths and enhancing the power network in some ports.

Water, Agriculture, and Infrastructure Sector:

a.Total expenditure amounts to SR 50.8 (US $13.5) billions, an increase of 10 percent over FY 2010 appropriation.

b.Appropriations for new projects include enhancing water sources, dams and wells, as well as expanding and improving water and sewage networks. There are also allocations for new water desalination stations and upgrading existing stations.

New projects will be undertaken in the industrial cities of Jubail, Yanbu, and Ras Azur to accommodate new investment projects.

Specialized Credit Development Institutions and Government financing programs:

Specialized credit institutions (Real Estate Development Fund, Saudi Industrial Development Fund, Saudi Credit and Saving Bank, Saudi Arabian Agriculture Bank, Public Investment Fund, and Government Lending Program) will continue to provide loans to the industrial and agriculture sectors, housing, and small and medium enterprises which will support job creation and enhancing growth prospect.

It is estimated that SR 47 (US $12.5) billions will be disbursed in 2011 by these Institutions. The total value of loans provided by these institutions since their inceptions amounts to more than SR 414.3 (US $110.5) billions.

Economic Developments in 2009

1 - Gross Domestic Product (GDP)

According to Central Department of Statistics and information, GDP is estimated to reach SR 1,630 (US $434.7) billions in current prices in 2010, reflecting a growth of 16.6 percent compared to 2009. Private sector is estimated to grow by 5.3 percent in current prices in 2010.

In real terms, Overall GDP is estimated to grow by 3.8 percent, with government sector growing by 5.9 percent and private sector by 3.7 percent in 2010 and its contribution to GDP is expected to be 47.8 percent. All components of the GDP recorded positive growth in 2010. In particular, the non-oil industrial sector is estimated to grow by 5.0 percent; construction sector by 3.7 percent; electricity, gas, and water sector by 6.0 percent; transport and communication sector by 5.6 percent; wholesale, retail, restaurants, and hotels by 4.4 percent; and finance, insurance and real estate by 1.4 in constant prices.

2 - General Price Level

Inflation, as measured by the cost of living index, is estimated at 3.7 percent in 2010, while the non-oil GDP deflator showed an increase of 1.5 percent.

3 - Foreign Trade and balance of payment

According to the Saudi Arabia Monetary Agency (SAMA) preliminary data, total exports of goods are estimated to be SR 886.3 (US $236.3) billions in 2010, representing an increase of 23.0 percent over 2009. Non-oil exports of goods are estimated at SR 124.2 (US $33.1) billions, reflecting an increase of about 14.0 percent and representing 14.0 percent of total goods exported.

Total imports of goods are estimated at SR 326.2 (US $87.0) billions in 2010, representing a growth of 0.7 percent compared to 2009.

According to the Saudi Arabia Monetary Agency (SAMA) preliminary data, trade balance is estimated to record a surplus of SR 557.9 (US $148.8) billions in 2010, an increase of 41.4 percent compared to last year, as a result of the increase in oil and non-oil exports and the low growth in imports.

Current account is estimated to record a surplus amounting to SR 260.9 (US $69.6) billions in 2010 compared to SR 78.6 (US $21.0) billions in 2010, an increase of 32.0 percent.'