Ahead of the new Saudi budget announcement, Al Rajhi Capital forecast that government revenue is expected to jump almost 35 percent in 2011 compared to the actual revenue in 2010. The jump in the total revenue is expected mainly due to higher oil production and prices. Al Rajhi Capital said in its report before the budget announcement that “We expect total revenue to be SR992 billion with oil revenue at SR908 billion in the current year.” However, government expenditure is also expected to have jumped due to many initiatives taken by the government early this year. Total expenditure is expected to jump at SR 814 billion, a 30 percent increase in 2011 compared to the actual expenditure in 2010. Thus, total budget surplus is likely to be SR178 billion in 2011. Al Rajhi Capital said expectation of oil price in the year 2012 is lower at $95 per barrel. Therefore, decline is expected in both government revenue and government expenditure in 2012 compared to 2011 mainly on account of expected fall in nominal oil sector GDP and fall in one time expenditure incurred by the government this year. Total revenue is expected to decline from SR992 billion in 2011 to SR890 billion in 2012 mainly due to expected decline in oil revenue from SR908 billion to SR802 billion. Total expenditure is expected to decline from SR814 billion in 2011 to SR746 billion in 2012.
