Saudi govt sets $219 bln ‘record budget’ for 2013 Surplus hits $102.9b on rising revenues

RIYADH, Dec 29, (Agencies): The Saudi finance ministry said on Saturday the kingdom’s budget surplus in 2012 hit 386 billion riyals ($102.93 bn) as oil-dominated revenues continued to rise.
The kingdom also announced what it described as a record budget for the coming year, with expenditure expected at $2i9 billion and revenues amounting to $221 billion.
The world’s largest exporter of crude oil traditionally uses a conservative price for oil in its budget. Oil revenues amounted to 92 percent of total revenues in 2012, the finance ministry said in a statement.
Revenues in 2012 amounted to 1,239 billion riyals ($330.4 billion), while expenditure hit 853 billion riyals ($227.5) billion, said the statement carried by the SPA state news agency.

The oil-rich kingdom had expected a small surplus of 12 billion riyals ($3.2 billion) in 2012, with revenues expected to reach 702 billion riyals ($187.2 billion) and expenditure increasing only to 690 billion riyals ($184 billion).
In 2013, revenues are projected to reach 829 billion riyals ($221.06 billion), while expenditure is planned at 820 billion riyals ($218.7 billion), the agency reported.
“The council of ministers has passed the largest budget in the history of the kingdom,” Al-Ekhbariyah state television reported.
Ailing King Abdullah, who underwent a back operation last month, presided over a council of ministers meeting on Saturday.
“There is plenty of wealth, thanks be to Allah,” the monarch said in a shaky voice, addressing his ministers, according to television footage.
“You have no excuse after today for any dereliction or complacency,” he said, according to the television report.
Some 25 percent of the budgeted expenditure is earmarked to education, including building new schools, vocational training and scholarships abroad, according to a breakdown provided by the ministry.
Roads and transport are allocated 65 billion riyals ($17.3 billion), while water, agriculture and industry are to get 57 billion riyals ($15.2 billion).
In 2011, OPEC kingpin registered also an impressive budget surplus of 306 billion riyals ($81.6 billion), as revenues turned out to be double the conservative forecast.
Revenues that year hit 1.110 trillion riyals ($296 billion) compared to a forecast of 540 billion riyals, while expenditure hit 804 billion riyals ($214.4 billion), after it was planned at 580 billion riyals.
On Saturday, Finance Minister Ibrahim al-Assaf told ministers that real growth in the kingdom’s gross domestic product (GDP) is expected to be 6.8 percent in 2012, with 5.5 percent growth in the oil sector and 7.2 percent in other sectors.
He put the rise in inflation in 2012 at 2.9 percent compared with the previous year, and 4.5 percent compared with the benchmark year of 1999, according to the SPA news agency.
Saudi Arabia continues to use part of its surplus to repay its public debt.
Assaf said debt by the end of 2012 will stand at 98.848 billion riyals ($26.36 billion) compared with 135.5 billion riyals (36.1 billion) at the beginning of the year.
Riyadh has been aggressively ramping up spending for several years to ease domestic political tensions and because it wants to diversify the economy away from heavy dependence on oil, in case of a future plunge in global oil prices.
Capital spending totals 285 billion riyals in the 2013 budget, much of it going to projects such as ports, railroads and water resources. Expenditure on education and health is also set to increase sharply.
Fahd Alturki, senior economist for Riyadh-based Jadwa Investment, said that after several years of big spending rises, the economy was starting to find it harder to respond to additional government money.
Nevertheless, he predicted the budget would help Saudi Arabia grow strongly next year, especially in sectors that depend on domestic demand such as retail and telecommunications.
The country is already enjoying a private sector boom. Gross domestic product, adjusted for inflation, expanded 6.8 percent this year, the finance ministry said. The private sector shot up 7.5 percent, outpacing state sector growth of 6.2 percent.
The government raised its estimate of GDP growth in 2011 to 8.5 percent from 7.1 percent, without explaining why the belated revision, which was due to the completion of a census, was so large.
Next year’s budget plan envisages revenue of 829 billion riyals, which implies a small budget surplus of just 9 billion riyals. But if global oil prices stay above $100 a barrel, the actual 2013 surplus will be far larger.
While the 2012 budget originally envisaged revenues of 702 billion riyals, they actually amounted to an estimated 1.24 trillion.
The budget document did not reveal the oil price level that Riyadh is assuming for next year, but Malik at EFG-Hermes calculated that the budget implied an oil price of around $64-67 per barrel, with average Saudi oil production of about 9.5 million barrels per day.
Data released by the finance ministry on Saturday indicated the government posted a budget surplus of 14.2 percent of GDP this year. Malik predicted the surplus would declined to 7.4 percent next year —  still one of the highest in the world.

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