Last Updated: Sun Oct 17, 2010 02:12 am (KSA) 23:12 pm (GMT)

Saudi Arabia adopts highest budget in its history

The new Saudi budget is the biggest in the kingdom's history
The new Saudi budget is the biggest in the kingdom's history

The Saudi cabinet agreed on Monday a budget for 2010 that forecasts a deficit of $18.7 billion, with spending hitting a record-high of 540 billion riyals($144 billion), Al Arabiya TV reported.

The budget projects revenues of 505 billion riyals ($125.3 billion) and a fiscal deficit of 70 billion riyals ($18.67 billion) in 2010, its second straight deficit, as it increases spending.

The top OPEC exporter, which has largely shrugged off global turmoil and the Dubai debt crisis, plans to increase investments by 16 percent to 260 billion riyals in 2010 despite revenues falling to 470 billion riyals from 505 billion riyals in 2009.

Finance Minister Ibrahim al-Assaf told state news agency SPA the kingdom was always "conservative" with revenue estimates and the budget deficit might turn out smaller if oil prices improved. By continuing investment projects the kingdom would drive development, he added.

The kingdom, which accumulated huge reserves accumulated during a six-year oil price boom, wants to spend more than $400 billion over five years to upgrade infrastructure, airports, roads or power plants.

The member of the Group of 20 leading economies has largely shrugged off global turmoil and a recent debt crisis of state firm in neighboring Dubai -- and several firms have just unveiled plans for share offerings or even Islamic bond issuance.

Expenditures for education and training -- a key reform project -- rise by 13 percent to 137.6 billion riyals in 2010.

Faced with a fast-rising native population of 18 million, two-thirds of it under 30, King Abdullah has tried to modernize education at schools and universities.

Nominal GDP is estimated to be 1.384 trillion riyals in 2009, down 22 percent from 2008 but in real terms it has risen by 0.15 percent, the ministry said.

Inflation is estimated to be 4.4 percent in 2009.

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