Saudi Arabia’s macro-economy is in an exceptionally healthy state, as evidenced by the absence of a budgetary deficit, negligible public debt, non-existence of inflationary pressures and notable surpluses in trade and balance of payments accounts.

Official stats place inflation rate at 1.85 per cent. As such, the economy is not experiencing imported inflationary pressures at the moment, traditionally caused by strong prices for inbound goods. Also, the kingdom exports foodstuff such as dairy products thanks to efforts by private sector firms’ Almarai, Nada and Nadec.

Significantly, Saudi officials have managed to reduce the debt burden from a high of 82 per cent to around 3 per cent of GDP between 2003 and 2013. To their credit, the authorities used part of oil proceeds to pay back the public debt.

Trade balance for 2013 is estimated at a hefty $214 billion. In reality, the figure is down by 13 per cent versus 2012’s, partly due to higher imports and therefore offering a wider choice to consumers and, surely, a testimony to satisfactory economic growth.

Likewise, estimated surplus for the balance of payments is $165 billion, down 21 per cent, in turn reflecting a drop in trade account.

With regard to budgetary performance, statistics point to a surplus of $55 billion in fiscal year 2013, almost half of that achieved in 2012. The sharp drop is partly due to rise in spending on housing projects and socio-economic requirements, notably in managing challenge to find jobs for youths.

In retrospect, the budget for 2013 was prepared with revenues and expenditures standing at $221 billion and $219 billion, respectively, thereby leaving a shortage of $8 billion. However, stronger oil revenues, on the back of steady production and prices, allowed the authorities to increase spending on the one hand and turn the projected deficit into a surplus on the other.

Turning to fiscal year 2014, the authorities have prepared a budget with revenues and expenditures of $228 billion, thereby with no do deficit or surplus. However, a budgetary surplus could not be ruled out judging by final figures for fiscal years 2011, 2012 and 2013.

The 2014 budget represents around 30 per cent of the gross domestic product (GDP), which stands at $745 billion. In turn, this confirms the continued pivotal role of the public sector in the local economy.

Nevertheless, the kingdom boasts a strong private sector active in industrial and general services. Oil income accounts for some 90 per cent of budgetary revenues, a fact that places the Saudi economy at the mercy of developments in the oil market.

Accordingly, changes in oil prices leave their imprints on the Saudi economy. The use of oil income to retire public debt is one such example.

Certainly, heavy reliance on oil income is not entirely surprising at all, as the kingdom remains the world’s largest exporter of crude. It is estimated that Saudi Arabia produces some 9.7 million barrels of crude a day. The kingdom enjoys a sustained capacity of 12 million barrels per day.

Education and training account for about one quarter of total spending in fiscal year 2014. By one account, the authorities cover expenses of some 185,000 Saudi nationals studying at educational institutions throughout the world.

Certainly, the Saudi economy would benefit from returning students equipped with the latest knowhow.

Looking forward, the kingdom has no choice but to use the substantial oil proceeds to diversify the economy away from the petroleum sector.

The writer is a Member of Parliament in Bahrain.