The Saudi Arabian government will increase spending next year by almost 20 per cent to a record US$220 billion, as the kingdom develops and upgrades its infrastructure and social services.
Saudi Arabia sets record budget
The Saudi Arabian government will increase spending next year by almost 20 per cent to a record US$220 billion (Dh808.06bn), as the kingdom develops and upgrades its infrastructure and social services.
The 820bn riyals (Dh803.08bn) budget for 2013, was presented to King Abdullah by the finance minister Ibrahim Al Assaf, state media reported yesterday. Its budget for this year was 690bn riyals although it is estimated that actual spending this year was around 853bn riyals.
Shares on the Tadawul rose the most in more than a week on expectations that the record budget for next year will boost expenditure and support economic growth.
"Although external factors might seem negative due to the US fiscal cliff, Saudis are enthusiastic about the Saudi fiscal budget for this year which is affecting the market in a positive manner," said Mohammed Al Omran, the financial analyst and president of the Gulf Centre for Financial Consultancy in Riyadh.
The Saudi index has gained 7 per cent this year after falling 3.1 per cent last year.
"The budget will focus very much on social infrastructure, as well as wider physical infrastructure," Monica Malik, the Dubai-based chief economist of EFG Hermes, told Bloomberg.
"We expect to see higher spending on health care, education and low-income housing. A further focus of the government is to create job opportunities for its nationals."
Next year's budget plan envisages revenues of 829bn riyals, compared to 702bn riyals in the original plan for this year, state television Al-Ekhbariyah said. The country had a surplus of 386bn riyals this year. It projects a 9bn riyal surplus next year.
"There is plenty of wealth, thanks be to Allah," King Abdullah said, addressing his ministers. "You have no excuse after today for any dereliction or complacency."
Real GDP growth this year is expected to be 6.8 per cent, with 5.5 per cent growth in the oil sector and 7.2 per cent in other sectors.
Inflation in 2012 is rising at 2.9 per cent compared with the previous year, and 4.5 per cent compared with the benchmark year of 1999, the official SPA news agency said.
The kingdom's break-even price to balance next year's budget is estimated at $65 a barrel, an increase from $62.20 this year, National Commercial Bank, the kingdom's largest lender by assets, said last month in a report.
Meanwhile, in Abu Dhabi yesterday, a report by the Department of Economic Development revealed that manufacturing led economic expansion in the capital last year.
The sector's rate of growth doubled last year as it rose to 22 per cent compared to 11 per cent in 2010, reflecting the success of the government's economic diversification efforts, in line with the Abu Dhabi Economic Vision 2030.
The Abu Dhabi Economic Report 2012, said that "GDP had achieved a quantum leap" in 2011, increasing by 30 per cent to Dh806bn and "exceeding the levels that had been reached prior to the global economic crisis" with non-oil industries expanding 7 per cent last year; as well the continued strong growth of manufacturing activity, which achieved the highest growth rate among non-oil economic activities.
* with agencies