Saudi Arabia Announces Record Budget Surplus

Saudi Arabia announces record budget surplus

http://www.todayonline.com/articles/89784.asp

Time is GMT + 8 hours
Posted: 13-Dec-2005 03:42 hrs

Kingdom Tower in Riyadh. Oil powerhouse Saudi Arabia said it will post a record budget surplus of 57 billion dollars in 2005 on the back of surging crude prices, and forecast its biggest-ever spending plans for next year.

Oil powerhouse Saudi Arabia said it will post a record budget surplus of 57 billion dollars in 2005 on the back of surging crude prices, and forecast its biggest-ever spending plans for next year.

Revenues by the end of 2005 will reach 555 billion riyals (148 billion dollars), while net expenditure will be 341 billion riyals (90.94 billion dollars), the finance ministry said in a statement on its website.

Saudi Arabia had initially projected a expected a balanced budget for 2005 with revenues and expenditure both set at 280 billion riyals (74.66 billion dollars).

The Saudi government usually uses a conservative oil price of 17 dollars a barrel when planning its budget, which explains the wide gap between budgeted and actual revenues in the past few years when prices rocketed to 70 dollars.

However, this year's actual oil receipts which represent about 75 percent of income in the world's largest oil-producing nation, have not yet been revealed.

The ministry said that public debt had been reduced to 475 billion riyals (126.7 billion dollars) from an estimated 176 billion dollars in 2004 thanks to consecutive budget surpluses.

It also said the kingdom's gross domestic product grew by 6.54 percent in constant prices in 2005, reaching 1.15 trillion riyals (307.3 billion dollars).
Oil revenues, which grew by 37.5 percent at current prices, contributed largely to the robust economic performance, it added.

Saudi Arabia's cabinet also passed its budget plan for 2006, with expenditure expected to reach 335 billion riyals (89.3 billion dollars) which the official SPA news agency said was the "largest in the kingdom's history."

Revenues are expected to reach 390 billion riyals (104 billion dollars), SPA added, anticipating a surplus of 55 billion riyals (14.7 billion dollars).

The cabinet has earmarked 126 billion riyals (33.6 billion dollars) to be pumped into new development projects in the 2006 budget, while 26 percent of its total will be allocated to the education sector, SPA said.

The oil windfall has allowed the government to allocate revenues for some much-needed development projects, many of which were shelved during years of cash shortages due to lower oil prices.

Saudi Arabia's OPEC quota, which was confirmed on Monday by the cartel at a meeting in Kuwait City, is currently 9.099 million barrels a day.

In 2004, revenues also made up essentially of oil exports reached 393 billion riyals (104.8 billion dollars), compared to spending of 295 billion riyals (78.66 billion dollars), leaving a 26.14-billion-dollar surplus.

Some 12 billion dollars of the surplus was earmarked to cut public debt.

Saudi Arabia also posted a 12-billion-dollar surplus in the 2003 fiscal year, the first non-deficit budget since 2000, on the back of rising oil prices coupled with a production hike. — AFP