Saudi awards contracts worth $5.6 billion in five-year infrastructure plan
Kingdom plans to spend more than $400 billion on roads, hospitals and other projects in the next few years.
April 25, 2010 3:57 by Ben Flanagan
Saudi Arabia awarded development contracts worth SAR20.9 billion ($5.6 billion) in the first quarter of this year as the Middle East’s largest economy pursues a five-year infrastructure program.
The world’s top oil exporter has like other nations boosted spending on infrastructure, health care and education to underpin economic growth, and has warned against early withdrawal of stimulus packages.
Saudi Arabia, a member of the G20, plans to spend more than $400 billion until 2013 for projects such as roads, hospitals and other infrastructure to serve its mainly young population of 18 million people.
The Saudi Press Agency gave no comparison but in May last year Finance Minister Ibrahim Al-Assaf put the value of contracts in the first quarter of 2009 at SAR40.6 billion.
“The government is seeing clear signs of a recovery so it could be that spending is less spread over the full year more evenly,” said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.
“It is hard to sustain high spending from one quarter to the next but the government’s announced spending program is on course,” he said. In the fourth quarter the value of contracts had risen to SAR32 billion versus SAR20 billion in the same period a year ago, he added.
The largest chunk, 479 contracts worth SAR15.7 billion, went into construction projects such as building roads, schools or hospitals, the Finance Ministry said.
The government spent SAR4.7 billion on building schools, SAR3.6 billion on health or water projects, SAR2.4 billion on city and town development, and SAR1.7 billion on road works and transport, the SPA said quoting the ministry.
Saudi Arabia said in December it plans to raise investments by 16 percent to SAR260 billion this year. Muhammad Al-Jasser, governor of the Saudi Arabian Monetary Agency, told Reuters in March that local lending growth is set to recover this year.
The IMF expects the Saudi economy to grow by 3.7 percent this year after 0.15 percent in 2009.
The ministry said it had approved 33 contracts worth SAR1.19 billion for medicine, food and fuel, and 150 contracts for operation and maintenance with a total value of nearly SAR4 billion.
This year’s general budget has allocated SAR137.6 billion for education and training. The amount will be used to fund the King Abdullah Project for Development of Public Education, the creation of 1,200 new schools and the completion of more than 3,000 school buildings that are already under construction.
The Ministry of Higher Education’s budget includes funding for the construction of four new universities and the expansion of existing ones, increasing student enrollments at institutes of higher learning and scholarship programs abroad.