Business | Economy
Saudi Arabia to invest Dh528b next year to spur growth
The plan is intended to create jobs for its fast-growing young population.
- Reuters
- Published: 00:00 December 21, 2010
- Image Credit: AP
- The biggest Arab economy expects revenue in 2011 to come to 540 billion riyals, leaving a deficit of 40 billion riyals.
Jeddah: Saudi Arabia says it plans to spend 580 billion riyals (Dh528 billion) in 2011 as it invests in education and infrastructure to spur growth in the top oil exporter.
The plan is also intended to create jobs for its fast-growing young population.
The biggest Arab economy expects revenue in 2011 to come to 540 billion riyals, leaving a deficit of 40 billion riyals, the finance ministry said.
"The national budget will continue to focus on enhancing the development process and ensure that investment programmes remain conducive to strong and sustainable economic growth," the finance ministry said in a statement, listing education, health and infrastructure projects among priorities.
The Saudi banking sector was largely unaffected by the global financial turmoil but banks were hit by exposure to domestic loans and lending has been sluggish.
Riyadh gave no oil price for the budget — based on budgeted spending, the third straight record one — but EFG-Hermes chief economist Monica Malek put it at $50-$55 a barrel.
"We see real non-oil GDP strengthening further in 2011.
"The budget again seems to underestimate the oil price and we forecast that Saudi Arabia will realise another surplus in 2011," Malik said.
Salary increases
In 2010, actual revenues have come to 735 billion riyals and actual expenditures reached 626.5 billion riyals. It overspent by 86.5 billion riyals, mainly for salary increases for soldiers, and for some development and education projects.
Saudi Arabia expects 2010 real GDP growth of 3.8 per cent and inflation of 3.7 per cent, without giving a forecast for next year. Private sector growth is expected to be 3.7 per cent in 2010.
The kingdom has accumulated huge reserves during a six-year oil price boom. It is planning to spend more than $400 billion over the five years to 2013 to upgrade infrastructure, including airports and roads.
For 2011, the government plans to increase spending for education, health, transport and other infrastructure projects ranging some five to 13 per cent over budgeted 2010 figures.
"It's another stimulatory budget for the economy," said Paul Gamble, head of research at investment bank Jadwa Investment.
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