Governments must be responsive to the needs of their people, otherwise social and political instability are sure to follow.
This is why those who can afford it must invest in sustainable social and economic infrastructure development programmes. Saudi Arabia is doing this in the budget that the kingdom has announced for 2012, which will see it invest heavily in building homes and reducing unemployment. However, the country continues to be responsible in its spending plans — which will total 690 billion riyals, for the 2012 — a 17 per cent decrease in its actual expenditure for this year. This is necessary in these times when the international financial system remains persistently volatile.
In addition, its income is likely to be higher than budgeted as it, correctly, uses relatively conservative oil price predictions when estimating its revenue. Oil prices are expected to remain high next year.
Increased Saudi spending will also provide a boost for economic growth in the region. Saudi Arabia is the biggest Arab economy and is part of free trade agreements between Gulf Cooperation Council countries. This means that companies and people in the whole region will be able to benefit from the business generated by the investment projects it will put in place.
