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Saudi will prevail!
Arab News published an editorial on Saudi Arabia’s commitment to development, and why the nation’s predicted deficit for 2010 is no problem at all. It’s one of the most obvious displays of brownnosing Kipp’s seen in a long time (aside from articles published in Emirates Business 24/7, of course).
December 23, 2009 10:35 by kippreport
Besides, the 2010 projected budget deficit of SR70 billion ($18.7 billion) can be dismissed as irrelevant.
At the very worst, the government can draw on foreign assets of over a trillion riyals – which in fact the Saudi Arabian Monetary Agency was doing for part of the year. It certainly does not have to borrow money.
But there are more pragmatic reasons to feel confident in Saudi Arabia’s growth. This year’s deficit is less than expected – SR45 billion ($12 billion) compared to the SR75 billion ($20 billion) projected a year ago (and that, despite a government overspend of SR75 billion). Luckily for the government, it based its 2009 budget on an average annual oil price of $37 a barrel, and was pleasantly surprised when prices averaged out at $62 a barrel.
And in 2010, there is no reason to believe that the price will average less than $70 a barrel – and government revenue projection is based on a very conservative $44 a barrel. That means that revenues will be higher than the projected SR470 billion – probably considerably higher. So will spending. It always is higher. The truth about the budget is that it is merely a guideline.
Therefore, there is every reason to believe that 2010 will see a similar drop in the deficit at year-end.
The economy is strong – very strong. There is going to be a wealth of construction projects going on and numerous of contracts to be signed. Because of it, Saudi Arabia will remain a key destination for the world’s businessmen and exporters, desperate to win them.
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