Al-Assaf estimated the Kingdom's oil exports this year at SR580 billion."Non-oil exports in 2005 reached SR69 billion, registering a 20 per cent increase, the minister said. The figure showed Saudi's diversification drive was yielding fruits.

He was speaking to Saudi Television following the announcement of the national budget for 2006,Saudi Arabia's current account was projected to record a surplus this year, SR326.5 billion, compared to SR194.7 billion last year. This represents an increase of 67.7 per cent. The Kingdom's 2006 budget projected expenditures at SR335 billion and revenues at SR390 billion, the largest in its history. The country is expected to post a record budget surplus of SR214 billion this year on the back of surging crude prices. According to the Finance Ministry, revenues by the end of 2005 will reach SR555 billion while net expenditure will be SR341 billion.

Al-Assaf said the Kingdom's economy was in good shape, thanks to the wise policies adopted by the government. Custodian of the Two Holy Mosques King Abdullah has ordered swift implementation of the welfare projects, for which allocations have been made from the budget surplus.

Increasing government revenues have allowed the Kingdom to trim public debt all of which is owed to local institutions. Debt should fall this year to SR475 billion or 40 per cent of GDP.

Al-Assaf said SR141 billion of this year's surplus would be spent on paying the debt and added that in 2006 debt would continue to be a priority. Inflation remains tightly controlled despite the economic boom, with the cost of living index rising just 0.4 percent this year and non-oil GDP deflator, seen by economists as a more accurate benchmark for inflation, up 1.14 per cent.

"But we have to be vigilant on inflation, given the large growth in government and private sector spending," Al-Assaf cautioned. Asked about the reason for the change in revenue projections, the finance minister said it was due to fluctuating oil prices."We initially predicted that revenues will reach SR280 billion this year but it did not affect implementation of development programmes, he said.

Al-Assaf said the Kingdom's oil sector grew by six to seven per cent this year at fixed prices and 37.5 per cent at current prices as a result of skyrocketing oil prices. He said the surge in oil prices had not created any inflation in the country. The ministry estimated the non-oil industry sector, which the government has targeted for growth to reduce dependence on oil revenues, would expand by 8.4 per cent this year.