Budget Report of Saudi Arabia

1. Kingdom of Saudi Arabia
Ministry of Finance
Highlights of Fiscal Years 1434/1435
(2013) & 1435/1436 (2014)
23 December 2013

2. Government
• The Kingdom of Saudi Arabia is an absolute
monarchy, under the al-Saud family. The
current ruler is King Abdullah, the sixth ruler
of the country since its independence from
the Ottoman Empire.

3. • Saudi Arabia has no formal written
constitution, although the king is bound by
the Koran and sharia law. Elections and
political parties are forbidden. There are an
estimated 7,000 princes, but the oldest
generation wields much greater political
power than the younger ones. The princes
head all of the key government ministries.

4. Population:
• Saudi Arabia has approximately 27 million
inhabitants, but 5.5 million of that total are
non-citizen guest workers. The Saudi
population is 90% Arab, including both city-dwellers
and Bedouins, while the remaining
10% are of mixed African and Arab descent.

5. Languages:
• Arabic is the official language of Saudi
Arabia. There are three major regional dialects:
Nejdi Arabic, with about 8 million speakers in the
center of the country; Hejazi Arabic, spoken by 6
million people in the western part of the country;
and Gulf Arabic, with about 200,000 speakers
centered along the Persian Gulf coast.
• Foreign workers in Saudi Arabia speak a vast array
of native languages, including Urdu, Tagalog, and
English

6. Religion:
• Saudi Arabia is the birthplace of the Prophet
Muhammad, and includes the holy cities of
Mecca and Medina, so it comes as no surprise
that Islam is the national religion.

7. Economy:
• Saudi Arabia's economy comes down to just one
word: OIL. Petroleum makes up 80% of the kingdom's
revenue, and 90% of its total export earnings. That's
unlikely to change soon; about 20% of the world's
known petroleum reserves are in Saudi Arabia.
• The kingdom's per capita income is about $31,800
(2012). Unemployment estimates range from about
10% to as high as 25%, although that includes only
males. The Saudi government forbids publication of
poverty figures.
• Saudi Arabia's CURRENCY is the riyal. It is pegged to
the US dollar at $1 = 3.75 riyals.

8. Highlights of 2013 Fiscal Year
• Total revenue was projected to be around SR
1,131 (US $301.6) billions in 2013 and
expenditure to be around SR 925 (US $246.7)
billions. As a result, a surplus of SR 206 (US
$54.9) billions should be realized

9. • Preliminary estimates indicated that the
public debt will decline from around SR 98.8
(US $26.3) billions at the end of 2012 to
around SR 75.1 (US $20) billions at the end of
2013, representing less than (2.7) percent of
projected GDP for 2013.

10. • The number of government projects signed
with the private sector in 2013 amounted to
(2,330) with a total value of around SR 157
(US $41.9) billions.

11. Overview of 2014 Budget
• For the first time since 2005, the Saudi
government has announced a balanced budget
for 2014, in sharp contrast to projecting surpluses
in earlier years. Revenues and expenditures for
2014 are forecasted to be at similar levels of
around SR855 billion. On the other hand, the
Saudi Arabian budget expenditure outlay, which
had witnessed sharp increase over the past few
years in the wake of the Arab spring, is set for a
contraction in 2014.

12. Some important Facts:
• Expansionary spending measures adopted in the
past are not sustainable .
• Saudi economy grew at a slower pace of 3.8% in
2013 vs 5.8% in 2012.
• The oil sector contracted 0.6% in 2013 on the
back of marginally lower oil prices compared to
2012 and a drop in oil production to 9.6 million
barrels per day in the year-to-date period, down
from previous year’s average 9.8 million barrels
per day.

13. • Non-oil private sector maintained a strong
growth of 5.5% year-on-year, supported by
sectors such as construction, retail, transport and
communications, all growing at above 5% year-on-
year
• The Saudi current account recorded a surplus of
around SR486.8 billion in 2013 compared to a
surplus of SR617.9 billion last year, a decrease of
21.2%, on account of lower oil export earnings.

14. • import of goods rose 8.0% on a year-on-year
basis to SR574.1 billion as imports of transport
equipment rose during the year.
• The nation’s debt and liquidity situation
remains fairly comfortable. The country
reduced its debt from SR98.8 billion in 2012 to
SR75.1 billion in 2013, and represents
about2.7% of 2013 GDP.

15. • Oil revenues likely to fall 25% in 2014
• Slow down in the pace of planned
expenditure in 2014 , a reaction to the
International Monetary Fund‘s (IMF) warning
of a budget deficit by 2016.
• Capital expenditure gets a reduced share in
overall expenditure

16. The National Budget for 1435/1436
(2014)
The followings are the main highlights of the
budget:
• 1. Total revenue is estimated at SR 855 (US $
228) billions.
• 2. Government expenditures is budgeted at SR
855 (US $ 228) billions.

17. • Budget appropriations will continue to focus on
investment programs that enhance long-term strong
and sustainable economic development and
employment opportunities for Saudi nationals.
Specifically, the focus will be on infrastructure,
education, health, social services, security services,
municipal services, water and water treatment
services, roads and highways. Moreover, the budget
attaches particular emphasis on science and
technology projects and e-government.

18. Revenue Sources
• Oil 90%
• Construction 5%
• Others 5%

19. Appropriations
1. Education:
• Total expenditure amounts to around SR 210
(US $56) billions, representing (25) percent of
FY 2014 total appropriations and an increase
of (3) percent over FY 2013 appropriation.

20. 2. Health and Social affairs:
• Total expenditure amounts to around SR 108
(US $28.8) billions, an increase of (8) percent
over FY 2013 appropriation.

21. 3. Municipality Services:
• Total expenditure amounts to around SR 39
(US $10.4) billions, an increase of (9) percent
over FY 2013 appropriation.
• The budget includes new projects for inter-city
roads, bridges, drainage and control systems.
It also includes other environment-related
projects.

22. 4. Infrastructure and Transportation:
• Total expenditure amounts to around SR 66.6
(US $17.8) billions, an increase of (2.5) percent
over FY 2013 appropriation.

23. 5. Water, Agriculture, Industry, and other Economic
Resources:
• Total expenditure amounts to around SR 61 (US $16.3)
billions, an increase of (5.7) percent over FY 2013
appropriation.
• The budget includes new projects amounting to around
SR 33 (US $8.8) billions for increasing water resources
through building dams, desalination, utilizing deep
aquifers wells, and expanding and improving water and
water treatment networks.

24. 6. Specialized Credit Development Institutions
and Government Financing Programs:
• It is estimated that around SR 85.3 (US
$22.75) billions will be disbursed in 2014 by
these institutions

25. Economic Developments in 2014
Gross Domestic Product (GDP)
• According to the Central Department of
Statistics and information (CDSI), GDP is
estimated to reach SR 2,794.8 (US $745.3)
billions in current prices in 2013, reflecting a
growth rate of (1.54) percent. The private
sector is estimated to grow by (9.38) percent,
whereas the oil sector declined by (3.83)
percent in 2013.

26. Foreign Trade and Balance of Payments
• According to the Saudi Arabia Monetary Agency
(SAMA) preliminary data, total exports of goods
are estimated to be around SR 1,376.2 (US $367)
billions in 2013, a decrease of (5.5) percent from
last year. Non-oil exports of goods are estimated
at around SR 197.6 (US $52.2) billions, reflecting
an increase of about (3.9) percent over last year
and (14.4) percent of total goods exported.

27. • Total imports of goods are estimated at
around SR 574.1 (US $153.1) billions in 2013,
growing by (8.0) percent compared to last
year.
• According to preliminary data from SAMA, the
trade balance is estimated to record a surplus
of around SR 802.1 (US $213.9) billions in
2013, reflecting a decrease of (13.3) percent
compared to last year.