Saudi Arabia has lowered 2012 Budget project for Revenues and Expenditure

Saudi Arabia flagSaudi Arabia figured out a $187 billion budget, on Monday, for next year representing a reduction in both public spending and revenues. The country shows a surplus forecast of approximately $3 billion.

The Finance Ministry announced the budget forecasting the revenues at 702 billion riyals ($187 billion) (in 2011 it was 1100 billion riyals) while expenditures are projected 16.5% below that of spending in 2011. The surplus realized in 2011 came in at 306 billion riyals ($69.7 billion).

Earlier in the year, Kind Abdullah announced approximately $130 billion public spending plan to benefit lower income people and spent to build housing units, creating jobs, raising salaries and unemployment benefits.

In the year 2011, public revenues in Saudi Arabia became 1.1 trillion riyals while expenditures totaled about 804 billion riyals, which was 224 billion more than that forecasted previously as reported by the Finance Ministry on its website. Moreover, Economic Growth is forecasted at 6.8% adding 250 billion riyals from 2011’s budget to be used in the construction of 500,000 new homes.

“Clearly it’s a very strong fiscal outcome for last year, after a massive surplus at just over 10% of [gross domestic product]. Not many countries can boast that in this day and age,” said Jarmo Kotilaine, chief economist of NCB Capital in Jeddah. “It’s an enviable starting point” for 2012.

“That’s a good thing,” Paul Gamble, head of research at Jadwa Investments in Riyadh, said. “When the revenue figure was unrealistic, and the spending figure was unrealistic” at the beginning “it was easier to overspend” over the course of the year.

Further Reading:

The Wall Street Journal

Statement by Ministry of Finance in Arabic

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