RIYADH – The Kingdom boosted its 2013 public expenditure target to SR820 billion as Custodian of the Two Holy Mosques King Abdullah approved the State budget for fiscal year 1434 -1435 H at an extraordinary session of the Council of Ministers here Saturday. The government's national spending target, which was raised from a forecast of SR690 billion for this year's budget, will be financed with projected revenue of SR829 billion. Upon the directives of King Abdullah to enhance the process of development and encourage the investment environment to create more job opportunities for citizens and boost economic growth, the budget continues to focus on developmental projects for the sectors of education, health, security, social and municipal services, water and sanitation, roads, electronic transaction and supporting scientific research. Presenting the budget highlights, the Ministry of Finance said that budget appropriations will continue to focus on investment programs that enhance strong long-term sustainable economic growth and employment opportunities for citizens, with particular emphasis on science and technology projects and e-government. Appropriations for investment projects total SR285 billion (US $76b). The education sector with an allocation of SR204 billion (US $54.4b) represents 25 percent of FY 2013 appropriations and an increase of 21 percent over the FY 2012 appropriation. New projects include 539 new schools at a total cost of SR3.9 billion ($1.0b) in addition to 1,900 schools currently under construction and more than 750 schools completed in FY 2012. Health and social affairs were allocated SR100 billion (US $26.7b), an increase of 16 percent over the FY 2012 appropriation. Projects include new primary care centers throughout the Kingdom and 19 new hospitals. At present, there are more than 100 hospitals under construction with a capacity of 23,000 beds and five medical cities with a capacity of 6,200 beds. In 2012, 29 new hospitals were completed with a capacity of more than 5,750 beds. For social services, the budget includes appropriations to build stadiums and sport facilities in 20 towns, and 15 social centers and social welfare and labor offices. In addition, the budget includes additional support for social welfare, citizens with special needs, and poverty reduction programs. New projects include intercity roads, bridges, and rain drainage and control systems. The budget also includes appropriations for studies and designs of public transport projects in Makkah and Riyadh. Infrastructure and transportation were allocated SR65 billion (US $17.3b), an increase of 16 percent over the FY 2012 appropriation. New projects amounting to SR30 billion ($8b) include roads totaling 3,700 km, upgrading and modernizing existing ports and building additional berths, additional infrastructure projects in the industrial cities of Jubail, Yanbu and Ras Al-Khair, expanding and upgrading regional and international airports, and railroads. Water, agriculture, industry, and other economic resources received an allocation of SR57 billion (US $15.2b), an increase of 11 percent over the FY 2012 appropriation. New projects amounting to SR24 billion ($6.4 billion) include increasing water resources through building dams and desalination, utilizing deep aquifers wells, and expanding and improving water and water treatment networks. In addition, new projects will be undertaken for the industrial cities and for building and expanding grain silos. Specialized credit institutions (Real Estate Development Fund, Saudi Industrial Development Fund, Saudi Credit and Saving Bank, Agriculture Development Fund, Public Investment Fund, and Government Lending Program) will continue to provide loans which aim to support job creation and increase growth prospects. It is estimated that SR68.2 billion ($18.2 billion) will be disbursed in 2013 by these institutions. According to the Central Department of Statistics and Information (CDSI), GDP is estimated to reach SR 2,727.4 billion ($727.3 billion) in current prices in 2012, reflecting a growth of 8.6 percent compared to 2011. The private sector is estimated to grow by 11.5 percent in current prices in 2012. As a result of the aggregate economic census implemented by CDSI to update the economic activities of the private sector, real GDP growth for 2011 has been revised upward to 8.5 percent instead of 7.0 percent. In real terms, GDP for 2012 is estimated to grow by 6.8 percent, with the oil sector growing by 5.5 percent and non-oil sector by 7.2 percent. In real terms, the government sector is estimated to grow by 6.2 percent and the private sector by 7.5 percent. In real terms, the private sector's contribution to GDP is expected to reach 58 percent. All components of GDP recorded positive and healthy growth in 2012. More specifically, the non-oil industrial sector is estimated to grow by 8.3 percent; construction by 10.3 percent; the electricity, gas, and water sector by 7.3 percent; the transport, storage and communication sector by 10.7 percent; wholesale, retail, restaurants, and hotels by 8.3 percent; and finance, insurance and real estate by 4.4 percent. Inflation, as measured by the cost of living index according to the revised goods and services basket based on the new 2007 base year is estimated to have increased by 2.9 percent in 2012, while the non-oil GDP deflator showed an increase of 3.8 percent. According to the Saudi Arabia Monetary Agency (SAMA) preliminary data, total exports of goods are estimated to be SR1.486 trillion ($396 billion) in 2012, representing an increase of 9.0 percent over 2011. Non-oil exports of goods are estimated at SR183 billion ($48.8 billion), reflecting an increase of about 4.0 percent and representing 12 percent of total goods exported. Total imports of goods are estimated at SR480 billion ($128 billion) in 2012, growing at 7.0 percent compared to 2011. According to preliminary data from SAMA, the trade balance is estimated to record a surplus of SR1.01 trillion ($268 billion) in 2012, an increase of 10.0 percent compared to last year. The current account is estimated to record a surplus of SR669.2 billion (178.5 billion) in 2012 compared to SR594.5 billion ($158.5 billion) in 2011, an increase of 13 percent. The broad money supply during the first 10 months of fiscal year 2012 grew by 10 percent compared to 10.2 percent for the same period of the previous year. With regard to the banking sector, bank deposits recorded a growth rate of 9.5 percent during the first 10 months of 2012, total banks claims on the public and private sector increased by 11.5 percent and their capital and reserves increased by 10.3 percent reaching SR210 billion ($56 billion). A number of developments and initiatives taken by the government mainly in 2012 have contributed to a rise in private sector confidence and its robust growth performance including: — The International Monetary Fund (IMF) commended the economic policies of the Kingdom in investing oil revenues to achieve local development objectives. The government announced a number of initiatives to address pressing social issues such as employment of nationals, housing, and SME financing. The Executive Directors of the IMF also commended the Kingdom's efforts to stabilize the international oil market, enhancing financial control, and risk management. — Standard & Poor's confirmed Saudi Arabia's sovereign rating at (AA-). — A report by the G20 showed that the Kingdom ranked first among the members of the group in the implementation of the obligations of the G20 in terms of structural reforms, fiscal discipline, financial institutions reform, and the regulation of financial markets. — New entities were established and laws pertaining to fiscal, institutional, and organizational reform were issued during FY 2012, including: the Television and Broadcasting Commission, the General Authority for Audiovisual Information, the Evaluation of General Education Commission, the Public Transport Authority, Anti-Money Laundering Law, Arbitration law, Real Estate Finance Law (mortgage law), Financial Lease Law, and Law on Supervision of Finance Companies. Highlights * Public debt expected to fall 3.6% of GDP to SR98.84b by end of 2012 from SR135.5b in the end of 2011 * GDP expected to grow 6.8% with oil sector 5.5% and non-oil sector 7.2% * Private sector's contributions in GDP would reach 58% of GDP * Cost of living index grew by 2.9% in 2012 from 2011 * Volume of exports in 2012 to grow 9% to SR1485 billion over 2011 * Non-oil exports to reach SR183 billion in 2012 (4% increase from 2011) * Volume of imports SR480 billion in 2012 (7% increase from 2011) * New projects, programs and additional allocations for current projects worth SR285 billion
