Al Arabiya TV reports that the government of Saudi Arabia will continue its high level spending on domestic programs in its new budget. Fully one-quarter of spending will go to education, with most of the rest being allocated to infrastructure and housing. Saudi revenues for 2012 came in at over twice the estimate made at the beginning of the year. Coupled with massive foreign reserves, the country can afford it.

Economists caution, though, that because revenue is based on petroleum production, it is liable to swings on the commodity markets. The country still needs to diversify its economy as well as to start controlling domestic consumption of petroleum and its products.

Big Spender: Saudi Arabia upholds high budget
Eman el-Shenawi
Al Arabiya with agencies

Determined to push past global economic crises and spiraling political unrest in the Middle East, Saudi Arabia’s recently announced all-time high expenditure plan is part of a strategy to bolster the Kingdom’s economic solidity.

Saudi Arabia’s council of ministers on Saturday agreed a record budget for 2013 with revenues expected to hit 820 billion riyals ($219 billion).

“This is not a surprise level of spending the Kingdom is committing to, this is all relative – to maintain 2012’s pace of growth, given that the government has been on an expansionary stance since 2011. This will help the Kingdom to cushion any blow coming from global weakness,” Said Hirsh of Capital Economics told Al Arabiya English on Thursday.

But while the continued big spending trend is expected to take place at “similar high levels over the next three years, the growth rate of this spending will slow,” Hirsh added.

“The biggest share of spending for the time being will be in infrastructure and housing, as well as maintaining growth in public sector salaries and social benefits,” Hirsh said.

Some 25 percent of the budgeted expenditure is earmarked for education, including building new schools, vocational training and scholarships abroad, according to a breakdown provided by the ministry.
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