Saudi budget surplus is forecast to surge more than 40 percent to SR226 billion ($60 billion) this year as a result of higher revenue, Riyadh-based Jadwa Investment said in a study. Its earlier estimate for the budget surplus was SR127 billion ($33.8 billion). The projected surplus this year will be more than double the SR109 billion ($29 billion) balance recorded in 2010 and against the SR87 billion ($23 billion) deficit in 2009. Jadwa expected the Kingdom's actual public expenditure to be around SR809 billion this year on account of the economic and social initiatives issued by King Abdullah, Custodian of the Two Holy Mosques. The revenue was forecast at SR1,035 billion ($276 billion) against previous estimates of SR948 billion ($252.8 billion), Jadwa said. The Kingdom based its budget on an average oil price of around $60 a barrel while prices are projected to average more than $30 above that level. Against this backdrop, higher prices and output would push up the Kingdom's oil sector by 14.4 percent, fueling GDP growth by nearly 7.1 percent in 2011, far higher than the 3.8 percent growth achieved in 2010, Jadwa said. It forecast growth in the government sector at five percent and in the private sector at 4.2 percent. Oil prices hovered above $94 a barrel Monday, shuffling between optimism about progress on the European Union-led bailout package for Greece and concerns about similar problems coming to the fore in Italy. By early afternoon in Europe, benchmark crude for December delivery was up 40 cents at $94.66 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 19 cents to settle at $94.26 in New York on Friday. In London, Brent crude was up 87 cents at $112.84 a barrel on the ICE Futures exchange. Jadwa forecast Saudi Arabia's average oil production to soar to 9.2 million bpd this year from 8.2 million bpd in 2010 while the price of Saudi crude is expected to swell to nearly $99.3 a barrel from $77.7 in the same period. The study also said high oil export earnings would cut the Kingdom's domestic debt to around SR160 billion at the end of 2011 from SR167 billion at the end of 2010. The debt was as high as SR614 billion at the end of 2004, it added. Jadwa said actual earnings could be nearly 70 percent above the budgeted revenue and the second highest level after the peak income of around SR1,101 billion in 2008, when oil prices hit their highest average of $95 a barrel and Saudi Arabia pumped as much oil as 9.2 million bpd, one of its highest levels. Moreover, total foreign assets controlled by the Saudi Arabian Monetary Agency (SAMA) soared by nearly 14 percent in the first nine months of 2011 to above SR2 trillion ($533 billion) from SR1,705 billion ($455 billion) at the end of 2010, the report noted.
