Saudi Arabia is noted for recording substantial budgetary surpluses. The surplus in the current fiscal year surpassed $100 billion level, a record not just for the kingdom exceptional by global standards.
Continuing a traditional practice, the budget for 2013 is conservative on both spending and income. However, if 2012 and 2011 could serve as guides, final figures would be notably different from the projected ones.
To be sure, projected revenues and expenditures for fiscal year 2013 are lower than those of 2012. For 2013, revenues and expenditures are projected at $221 billion and expenditures at $219 billion, thereby leaving shortage of $8 billion.
At the very least, total revenues would end up being higher due to developments in the oil sector. Notwithstanding the fact of being the largest oil exporter in the world, Saudi Arabia has developed a habit of not revealing assumed average oil price but generally assumed to be lower than going market rates reflecting an age-old conservative tendency.
Reverting to fiscal year 2012, the budget was prepared with revenues and expenditures of $187 billion and $184 billion, respectively, translating into a mere surplus of $3 billion. Yet, actual statistics for fiscal year 2012 are materially different from the projected figures in terms of income and spending.
Total revenues for 2012 ended up being $330 billion, up by a hefty $143 billion on the back of exceptional developments in regional geo-politics. This partly reflects Saudi Arabia’s ability of largely making up for Western embargo on imports crude oil from Iran. It is argued that the kingdom has the ability for sustaining crude oil out by some two million barrels above its Opec quota.
Still, actual spending increased but less impressively by $43 billion to $227 billion. Altogether, this translates into posting a record surplus of $103 billion. The figure is exceptional in many respects including that of comprising about 45 per cent of actual spending for 2012, something exceptional.
Also, the surplus represents than 14 per cent of total gross domestic product (GDP) of Saudi Arabia in 2012. The GDP in current prices stood at $727 billion in 2012 having registered a notable growth rate of 8.6 per cent.
This GDP figure reconfirms Saudi Arabia’s position amongst the top 20 economies in the world. In fact, the kingdom is the sole Arab country within the Group of 20 whose members include US, Russia, Japan, China, Brazil, India, Indonesia, Turkey and several EU members.
In addition, the budgetary surplus runs in the opposite direction of a key requirement of the Gulf Monetary Union (GMU) project. The scheme stipulates that budgetary deficit should be restricted to 3 per cent of GDP.
The GMU is one of several integrating projects amongst the six-nation Gulf Cooperation Council (GCC). Launched in 2011, only Saudi Arabia, Qatar, Kuwait and Bahrain are GMU members.
In fairness, other GCC countries are noted for recording budgetary surpluses on the back of relatively strong oil prices. For instance, Qatar prepared the budget for fiscal year 2012-13 with a projected surplus of $7.7 billion. The fiscal year in Qatar starts in April.
Certainly, there was only so much that Saudi authorities could do to augment expenditures in the absence of real plans for doing so. In reality, stronger spending by $43 billion is substantial enough by being some 23 per cent higher than the planned figure.
Possibly, unnecessary rise in spending has allowed for registering positive matters such as recording a limited inflation rate of 2.9 per cent in 2012 when compared to that of 2011.
Clearly, the Saudi economy is experiencing golden years.