Saudi Arabia approves record state budget for new fiscal year

Budget hits SR 690 billion, up by SR 110 billion compared to last year

Custodian of the Two Holy Mosques: Budget embodies continuity of our keenness on enhancing the march of sustainable development

Saudi Finance Minister: Budget boosts investment in human element

$312 billion to refresh investments

In its session held under the chairmanship of Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud Monday, the first day of the month of Safar 1433 AH corresponding to 26th of December 2011 at Al-Yamamah Palace in Riyadh, the Cabinet approved the state's general budget for the new fiscal year 1433/1434 AH.

In his statement to Saudi Press Agency following the session, Minister of Culture and Information Dr. Abdulaziz bin Mohieddin Khoja said that in the session which began with verses from the Holy Quran and by direction of the Custodian of the Two Holy Mosques, the cabinet discussed the state's budget for fiscal year 1433/1434 AH and approved it.

Then, the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud delivered a speech to his brothers and sons, the citizens, in which he announced the budget.

Following is the text of the king's speech which was delivered by Secretary General of the cabinet Abdulrahman bin Mohammed Al Sadhan:

In the name of Allah, the Merciful

Praise be to Allah and prayer and peace be upon our Prophet Mohammad and his family and companions.

Brothers and sons, the citizens,

Peace be upon you and Allah's mercy and blessings.

With the Praise of Allah, His help and guidance, we announce the budget of the new fiscal year 1433/1434 AH, which amounts to SR690 billion, an increase of SR110 billion riyals over the estimated budget for the current fiscal year 1432/1433 reflecting our continued commitment to promote sustainable development in our dear country and provide more job opportunities for citizens and confirmation of continuing balanced development among sectors and among regions while taking into account the outlook for the government finance and its balance as it included new projects and additional phases for a number of projects previously approved with estimated total cost of SR265 billion.

This budget further strengthens and supports what we recently enacted of the royal decrees which we hope, when implemented, can contribute to improving the standard of living of citizens.

It confirms our approach to give priority to human development which is the basis for comprehensive development.

Accordingly, an amount of more than SR168 billion of public expenditures was approved for general education, higher education and workforce training whose programs include continuation of work in implementing the project of developing the general education, approval of establishing more than 700 new boy and girl schools and allocations to complete the university cities and projects in the field of technological and technical training.

In the health sector and social development, the work continues to provide and raise the level of health and social services by approving nearly SR87 billion.

The new budget covered a number of projects including completion of establishing primary health care centers in all regions in the Kingdom and establishing 17 new hospitals.

The budget also included new projects for establishing sport clubs and cities, centers for social care and observation and rehabilitation as well as the necessary allocations to support social security programs.

The budget approved more than SR29 billion for municipal services. The budget of this sector includes new projects and additions to some existing projects.

Spending on roads, transport and communications reached more than SR35 billion. Their budget included new projects and additions to previous approved projects.

For the sectors of water, industry, agriculture and other infrastructure, the allocations reached nearly SR58 billion.

As its previous ones, the budget includes allocations to continue work to implement the National Plan for Science and Technology and the National Plan for Communications and Information Technology.

The specialized government development funds and banks will continue providing loans in the industrial, agricultural and small and medium project fields in a way that supports economic development and stimulate commercial financing.

In conclusion, we thank Allah who enabled us to continue work to utilize bounties of resources and capabilities granted to this country by Allah to develop our dear homeland. We ask Allah to help us to continue this work and may Allah make this budget beneficial to all citizens and all regions of our dear country. In this regard, we stress the precise and sincere implementation and follow-up of the budget.

Peace be upon you and Allah's mercy and blessings.

Then, Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud directed the Ministers to work hard and faithfully to implement the terms of this budget fully to achieve the comfort and well-being of citizens in all areas of life.

The Minister of Culture and Information said that upon directives from the King, the Minister of Finance made a brief presentation of the new draft budget of the State. He reviewed global economic situations, their developments and those of the national economy as well as the financial results for the current fiscal year 1432/1433 H in addition to the main features of the new budget as follows:

According to the royal directives and the importance of strengthening the development march and the continuing attractiveness of the general investment environment that will push economic growth and create more jobs for citizens, the budget for next fiscal year 1433 / 1434 H continued focusing on development projects, where financial allocations were distributed in a way focusing on sectors of education, health, security, social and municipal services, water and sanitation, roads, and electronic transactions, and the support for scientific research.

The Minister of Finance said that the budget included new programs and projects and additional phases for some projects already approved with a total value of about SR265 billion. As customary, the Ministry of Finance and the Ministry of Economy and Planning have coordinated on programs and projects included in the 9th Development Plan, which began in the current fiscal year 1431 / 1432 AH.

The Minister of Finance also reported that according to the Department of Statistics and Information, it is expected that the gross domestic product for this fiscal year 1432/1433 (2011) will amount to SR2.163 billion at current prices, an increase of 28% over the previous fiscal year 1431/1432 H (2010) as a result of the growth of the petroleum sector by 40.9%.

Regarding the GDP of the non-oil public and private sector, it is expected to achieve a growth rate of 14.3% as growth of the government sector is expected to reach 14.5% and the private sector by 14.3 % at current prices.

The Minister of Finance said that in terms of fixed prices, the Gross Domestic Product (GDP) is expected to score a 6.8 percent growth. The oil sector is expected to grow by 4.3 percent while the GDP for the non-oil sector is expected to grow by 7.8 percent as the governmental sector is expected to grow by 7.6 percent and the private sector by 8.3 percent.

Hence, the private sector's contribution to the GDP will reach 48.8 percent. All economic activities composing the domestic product for the non-oil have achieved positive growth. The real growth in the transformable non-oil industries is estimated at 15 percent, the communications, transport and storage 10.1%, electricity, gas and water 4.2%, construction and building 11.6%, wholesale and retail trade, restaurants and hotels 6.4% and capital services, insurance, real estate and business services 2.7%.

He explained that the record for living cost, the most important index for the general level for prices, has soared over the year 1432 /1433 (2011) by 4.7 % compared to 1431/1432 H. (2010) according to the General Statistics and Information estimates.

The modulus for the recess of the GDP for non-oil sector, which is considered among the most important economic indexes to gauge inflation in the economy in general, is expected to increase by 6.1 % in 1432/1433 H. (2011) compared to last year.

The minister added that the public debt is expected to decrease by the end of the current fiscal year 1432/1433 H. (2011) to nearly SR135,500,000,000 representing 6.3% of the expected GDP for the fiscal year 1432/1433 H. compared to SR167,000,000,000 by the end of the last financial fiscal year 1431/1432 (2010) representing 10% of the GDP for 2010.

The Minister of Culture and Information Dr. Abdulaziz bin Mohieddin Khoja said that the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud expressed thanks to Allah Almighty for the uncountable blessings Allah bestowed on this country as well as for this budget including all good for this country and its people.

Dr. Khoja also noted that this session coincides with the date of the Royal Decree issued by the founder of the Kingdom, late King Abdulaziz bin Abdulrahman Al Saud to establish the Council of Ministers 60 years ago. Now, we reap the fruits of that planting by the king founder.

The Custodian of the Two Holy Mosques urged all to thank Allah Almighty for the bounties He bestowed on this country and directed all officials to work for the service of the religion and country, feeling the burden of responsibility he bears on his shoulder.

The Minister said that following the speech of the King, the Cabinet discussed a number of issues relating to local affairs, where the Custodian of the Two Holy Mosques welcomed the newly appointed cabinet members, wishing them success in the service of religion and nation and thanking former Ministers for fulfilling their duties with all honesty and sincerity.

Custodian of the Two Holy Mosques also expressed appreciations of the Kingdom of Saudi Arabia's Government and people to the leaders and heads of delegations of the Gulf Cooperation Council (GCC) Member States, for the decisions of the 32nd session of the GCC Supreme Council which was held in Riyadh last week, aimed at serving the peoples of GCC countries and realize their aspirations. The King also expressed thanks to the GCC leaders for their welcome and blessing of the proposal he presented at the summit for the GCC to move from the phase of cooperation to the phase of union in one entity, achieving good and preventing evil and contributing to boosting cohesion and cooperation among the GCC citizens and achieving greater coordination and integration among GCC member states.

King Abdullah had received at Al-Yamamah Palace Dr. Ibrahim bin Abdulaziz Al-Assaf, Minister of Finance, and a number of officials at the Ministry of Finance on the occasion of issuance of the state's budget for the fiscal year 1433 - 1434 H.

The Custodian of the Two Holy Mosques also received Faisal bin Abdulrahman bin Mummar, Advisor to the King and Secretary General of King Abdulaziz for National Dialogue; Dr. Khalid bin Abdullah Al-Sabti, Deputy Minister of Education for Boy Affairs; and Dr. Abdulrahman bin Mohammed Al Ibrahim, Governor of the Saline Water Conversion Corporation, who came to greet the Custodian of the Two Holy Mosques on the occasion of issuance Royal orders appointing them in a new posts.

The Custodian of the Two Holy Mosques congratulated them, washing them all success.

For their part, they expressed thanks and appreciation of the Custodian of the Two Holy Mosques on the royal trust.

The two audiences were attended by Prince Salman bin Abdulaziz Al Saud, Minister of Defense; Prince Saud Al-Faisal, Minister of Foreign Affairs; Prince Metib bin Abdullah bin Abdulaziz, Minister of State, Member of Cabinet, and Commander of the National Guard; and Eng. Abdullah bin Abdulrahman Al-Hasain, Minister of Water and Electricity.

Assaf said that what has been submitted to the cabinet has three aspects: the first is the performance of the budget this year, the second is related to the estimate of the revenues and its approved expenditures and the third and last is the performance of the whole national economy.

The first aspect has witnessed, during the year, a growth in revenues due to the significant growth of petroleum income which reached its highest percentage or rate in the whole history of the Kingdom, which means that it exceeded its income three years ago in 2008, he added.

On the expenditures side, there were an increase, but it was a reasonable one, due to the royal orders issued to pay 2-month salary as well as to raise some funds for social security and other issues-affecting citizens' interests, he remarked.

The budget of the forthcoming year has depended on the basis of allocating SR690 billion for expenditures and SR702 billion for revenues, thus, with a surplus of SR12 billion, he stated.

For the third aspect of the budget, which relates to the performance of the national economy, the results for this year are among the best, since a very long time, almost more than 20 years, either on the growth scale, generally speaking, or on the growth of several sectors in addition to the balance of payments, the surplus in the balance of trade and the surplus in the current transactions, he confirmed.

These results asserts that the Saudi economy and the financial position of the Kingdom are moving on the right path and in accordance with the plan and falling in line with the directives of the Custodian of the Two Holy Mosques, he pointed out.

On the new projects, the Minister pointed to the directives of the Custodian of the Two Holy Mosques to use the biggest amount of the surplus of the budget, SR250 billion, to finance the royal order to build 500,000 housing units, which means that the earmarked fund will not be vulnerable to any negative impacts, God forbids, that may affect the fiscal aspects of the state budget in addition to allocating part of that fund for the Public Investment Fund to compensate it for financing the Two Holy Mosques Train (Haramain).

These two issues are under the direct interest and follow up of the Custodian of the Two Holy Mosques, the Minister reaffirmed, adding that the King wants these projects to be implemented without any disruptions or obstructions, thus he issued his noble orders to allocate these funds and be set in an independent account at Saudi Monetary Agency relating to housing.

The minister said that the Ministry of Housing has already signed the contract for the design and supervision of these units, and hopefully, the effective implementation of these projects will take place shortly in addition to the completion of what was previously dedicated to housing units, which are undergoing now.