Saudi Arabia will not need to tap into its reserves this year to finance additional budget spending but it is considering whether to issue Islamic or conventional bonds to help fund specific projects, Finance Minister Ibrahim Al-Assaf has said. The Kingdom pledged early this year to spend an estimated $130 billion, or nearly 30 percent of its economic output, on housing and other social measures for its citizens. That came on top of a record 2011 government budget of SR580 billion ($154 billion), raising the possibility that Saudi Arabia might have to dip into its fiscal reserves to fund spending. But Al-Assaf said he saw no need for this, since robust oil prices had helped to fill state coffers. “We have 2-1/2 months until the end of the year and lots of things can happen, but I would expect that we wouldn't need to tap into our reserves,” he said. “Yes we have higher expenditure than projected, but we have higher revenues than projected,” he said on the sidelines of a meeting of Gulf finance ministers in Abu Dhabi. The Saudi government has little debt; the IMF has estimated gross public debt will fall as low as 7.1 percent of GDP this year. Jadwa Investment has calculated that the country could run a budget deficit of 10 percent of GDP for the next decade without issuing any debt and still have substantial reserves. But there has been speculation in financial markets that the government could resume issuing debt, in order to prepare markets for the possibility of heavier issuance if it needs to raise funds in the future. Al-Assaf said debt issuance to help cover expanded budget spending was not on the cards. But he said issues of Islamic or conventional paper for projects were being considered. “We are considering specific project sukuk or bonds – a productive project that could issue sukuk. For example, the airports which are a very good investment,” he said. “We can issue sukuks to be financed from the receipts of the airport or this specific project. If there is a need for government guarantees, then we will look into it.” Saudi Arabia plans to spend over $400 billion in the five years to 2013 on infrastructure and development projects; it is working on three major railway projects and upgrading some of its airports.Asked whether Saudi Arabia was interested in investment opportunities in debt-stricken Europe, Al-Assaf said: “When it comes to investment of official resources, we are different from other countries because we don't invest long-term. We invest our surplus resources in semi-liquid assets with low risk. We don't invest them in direct investment. When it comes to the resources of our Funds, especially Public Investment Fund, we are continuing to focus on local investments.” Al-Assaf also said he was surprised by a proposal from some emerging countries in the Group of 20 nations to boost the resources of the International Monetary Fund. “I was surprised to read and listen to the proposal for increasing the resources of the IMF...I think the current resources, including those that are under process in the quota, would be sufficient to cover needs,” he said. Saudi Arabia is the only Arab member of the G20. “If we think of the huge demand on IMF resources, one expects it to be from Europe this time, so the main source of those resources will be the Europeans. Yet the IMF of course should be ready to supplement those resources and also be ready to help other member countries,” Al-Assaf said. Saudi Arabia will provide aid worth $3.75 billion to Egypt, whose economy has suffered from social turmoil in the wake of this year's uprising, he said. “It was announced: $3.7 billion and it is not all budget support. It is a mix of different items including budget support, bonds, and deposits in the central bank as well as concessionary assistance from the Saudi Fund for Development.” In June, the Kingdom gave a $400 million cash grant to Jordan, and it pledged to participate in a $20 billion Gulf aid package for Oman and Bahrain in March. “Saudi Arabia has been active in helping other Arab countries, and other friendly countries...We will continue to help them in their development process,” Al