Saudi Arabia announced on Monday a record budget of $228 billion for 2014, slightly up from $218.7 billion budgeted for this year, Al Ekhbariyah state news channel reported.
The state budget projects a modest 4.3 per cent rise in spending next year, suggesting the kingdom is starting to slow expenditure growth after three years of huge increases.
The world’s largest oil exporter also expected to conclude this year with a budget surplus of SR206 billion ($54.9 billion), after budgeting for a surplus of around $613 million. Revenues in 2013 are expected to reach SR1.131 trillion compared with an expenditure of SR925 billion.
The kingdom had budgeted for revenues of $221 billion in 2013, and an expenditure of $218.7 billion. In 2014, it is expecting a balanced budget of SR855 billion, the state television said.
Oil contributes the bulk of revenues for Saudi Arabia, which pumps 9.7 million barrels per day of oil, and has a capacity to produce more than 12 million bpd. The International Monetary Fund expects the Arab world’s largest economy to grow by 3.6 per cent and 4.4 per cent in 2013 and 2014, respectively, after expanding by 5.1 per cent last year.
Saudi Arabia has been using part of its large windfalls of oil revenues to repay its public debt, which has dropped to SR75.1 billion, or 2.7 per cent of its gross domestic product, according to Al Ekhbariyah.
Actual expenditure and revenue in the world’s top oil exporter often turn out to be much larger than its projections, allowing the kingdom to post big budget surpluses, as oil prices generally come in higher than its conservative assumptions. Next year’s 4.3 per cent rise in planned spending is far smaller than the 19 per cent leap envisaged by the 2013 budget plan.
The IMF told Saudi Arabia this year it was spending more than it should if it wanted to preserve oil wealth for future generations, and that its state budget could fall into deficit by 2016 if expenditure continued rising fast.
Lower state spending growth could slow the economy. The finance ministry predicted on Monday that gross domestic product will grow only 3.8 per cent this year, down from 5.8 per cent in 2012.
The ministry did not specify the oil price which it is assuming in next year’s budget calculations. Analysts estimate it has assumed prices close to $70 a barrel in recent years; Brent crude oil is now trading at $111, suggesting the Saudi budget may again be comfortably in surplus next year.
When we choose to look away for good, we are as complicit as those at the helm of this atrocity
Over 100 people in Lebanon have been reported killed during the hostilities started on October 7