Saudi Arabia boosted its 2013 public expenditure target to SR820 billion ($218.7 billion) as the Saudi King Abdullah approved the State budget for fiscal year 1434 -1435 H (2013) at an extraordinary session of the Council of Ministers on Saturday 29 December.
The government’s national spending target, which was raised from a forecast of SR690 billion (this amount is 19 percent higher from 2012), will be financed with projected revenue of SR 829 billion ($221.1 billion).
“The 2013 budget points to a continued strong expansionary fiscal stance,” said Monica Malik, chief economist at investment bank EFG-Hermes in Dubai, who predicted actual spending would rise by 10 percent or more next year.
Upon the directives of King Abdullah to enhance the process of development and encourage the investment environment to create more job opportunities for citizens and boost economic growth, the budget continues to focus on developmental projects for the sectors of education, health, security, social and municipal services, water and sanitation, roads, electronic transaction and supporting scientific research.
Nevertheless, social welfare and development projects are the focus of new budget. King Abdullah pledged more than $500 billion on social welfare and to build projects to ensure that the country remains unscathed by the kind of political unrest that swept through other Arab countries in the past two years. He is using oil money to fight high unemployment — about a quarter of Saudis between 20 and 30 don’t have jobs — and to build schools and hospitals. The budget has more than doubled in size since 2006.
The government expects 2013 revenue to generate a surplus of SR9 billion, the Finance Ministry said in a statement. The kingdom posted revenue of SR1.24 trillion in 2012 as the price of Brent crude held above $100 a barrel for a second year.
The followings are the main highlights of the 2013 budget:
1. Total revenues are projected at SR 829 ($221.1) billions.
2. Government expenditures are budgeted at SR 820 ($218.7) billions.
3. Fiscal surplus is projected at SR 9 ($2.4) billions.
Budget appropriations will continue to focus on investment program that enhance strong long-term sustainable economic growth and employment opportunities for citizens. Specifically, the focus will be on education, health, social services, security services, municipal services, water and water treatment services, roads and highways. Moreover, the budget attaches particular attention to science and technology projects and e-government.
Appropriations for investment projects will be totaling SR 285 ($76) billions. They are as follows:
Total expenditure amounts to SR 204 (US $54.4) billions, representing (25) percent of FY 2013 appropriations and an increase of (21) percent over FY 2012 appropriation.
New projects include 539 new schools amounting to SR 3.9 ($1.0) billion in addition to 1900 schools currently under construction and more than 750 schools completed in FY 2012, reducing leased schools to (22) percent of total of more than (33000) schools compared to (41) percent three years ago. In addition, the budget includes appropriations for increasing number of classrooms, rehabilitation of 2000 existing school buildings, and enhancing safety measures in schools.
For higher education, the new budget includes appropriations for the Saudi Electronic University, opening of (15) new colleges, and completion of the construction of campuses for the newly created universities including housing of faculty members, and building three university hospitals. With regard to the scholarship program, the total number of students studying abroad reached over (120000) students (excluding their dependents who are also supported by the government) with expenditures amounting to more than SR 21.6 ($5.8) billion.
In addition, new projects include building new technical colleges and institutes costing SR 3.5 ($0.9) billion as well as additional appropriations for opening new colleges and institutes.
2. Health and Social affairs:
Total expenditure amounts to SR 100 ($26.7) billions, an increase of 16 percent over FY 2012 appropriation.
Projects include new primary care centers throughout the Kingdom, 19 new hospitals. At present, there are more than (102) hospitals under construction with a capacity of (23000) beds and five medical cities with a capacity of (6200) beds. In 2012, twenty nine new hospitals were completed with a capacity of more than (5750) beds.
For social services, the budget includes appropriations to build stadiums and sport facilities in twenty towns, and (15) social centers, social welfare and labor offices. In addition, the budget includes additional support for social welfare, citizen with special needs, and poverty reduction programs.
3. Municipality Services:
Total expenditure amounts to SR 36 ($9.6) billions, an increase of 23 percent over FY 2012 appropriation.
New projects include inter-city roads, bridges, and rain drainage and control systems. It also includes other environment-related projects.
Also, the budget includes appropriations for studies and design of public transport projects in Makkah and Riyadh.
4. Infrastructure and Transportation:
Total expenditure amounts to SR 65 ($17.3) billions, an increase of 16 percent over FY 2012 appropriation.
New projects amounting to SR 30 ($8) billion including roads totaling 3700 km, upgrading and modernizing existing ports and building additional berths, additional infrastructure projects in the industrial cities of Jubail, Yanbu and Ras Al-khair, expanding and upgrading regional and international airports, and railroads.
5. Water, Agriculture, Industry, and other Economic Resources:
Total expenditure amounts to SR 57 ($15.2) billions, an increase of 11 percent over FY 2012 appropriation.
New projects amounting to SR 24 ($6.4) billion including increasing water resources through building dams, desalination, utilizing deep aquifers wells, and expanding and improving water and water treatment networks.
In addition, new projects are undertaken for the industrial cities and building and expanding grain silos.
6. Specialized Credit Development Institutions and Government Financing Programs:
Specialized credit institutions ( Real Estate Development Fund , Saudi Industrial Development Fund , Saudi Credit and Saving Bank, Agriculture Development Fund, Public Investment Fund, and Government Lending Program) will continue to provide loans which aim to support job creation and increase growth prospects.
It is estimated that SR 68.2 (US $18.2) billions will be disbursed in 2013 by these institutions. The total value of loans provided by these institutions since their inception amounts to SR 500 (US $133.3) billions.