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Saudi Arabia Budgets For Big Decrease In 2012 Surplus
Government probably conservative on spending, oil revenue; Projected 2012 spending well below this year's record high; But it is above original plan for 2011; 250 billion riyals set aside to build 500,000 homes; Analysts still see expansionary fiscal policy.
December 27, 2011 8:51 by Reuters
After boosting expenditure to record levels this year in response to uprisings across the Arab world, Saudi Arabia set a conservative state budget for 2012, but analysts said they expected actual spending next year to be large enough to keep the economy growing comfortably.
The government plans to spend 690 billion riyals ($184 billion) in 2012, the finance ministry said on Monday. That would be up from 580 billion riyals originally envisaged for 2011 but well below this year’s actual spending of 804 billion.
The ministry projected the budget surplus of the world’s biggest oil exporter, which depends mainly on oil revenues, would shrink to just 12 billion riyals in 2012 from 306 billion riyals this year.
However, analysts said the Saudi government traditionally made conservative projections for both spending and oil revenues, leaving room for actual expenditure and budget surpluses to come in much larger than initially forecast.
“We still find this to be an expansionary budget,” said Monica Malik, chief economist at investment bank EFG-Hermes in Dubai, adding that actual spending might rise about 11 percent next year after a 23 percent jump this year.
By Angus McDowall and Andrew Torchia