RIYADH, (AFP) — Oil-rich Saudi Arabia unveiled a budget for 2010 on Monday that forecasts a deficit of 18.7 billion dollars for the second year in a row but still boosted public spending, the finance ministry said.
The new budget estimates spending at 144 billion dollars, the highest projected expenditure ever, as allocations for development projects increased by almost 10 billion dollars to 70 billion dollars, the ministry said.
The budget projects revenues at 125.3 billion dollars, the ministry said in a statement after the cabinet gave its approval at its weekly meeting.
Finance Minister Ibrahim al-Assaf said the projected budget deficit will shrink if oil prices increase.
The ministry also said actual spending in 2009 stood at 146.7 billion dollars while actual revenues were 134.7 billion dollars, about 16 percent higher than initial projections due to higher oil income.
The ministry estimated the 2009 deficit at 12 billion dollars, lower than the projected deficit of 17.3 billion dollars, again due to a higher than expected oil price.
This is the first actual budget deficit for the OPEC kingpin since 2002. In intervening years the kingdom has amassed huge surpluses on the back of high oil prices.
Actual spending for the current year was the highest ever and exceeded the 127 billion dollars initially projected.
The ministry said that the increase in spending came due to higher payments for expansion projects at the Grand Mosque in Mecca, military and security projects, and pay increases for some government employees.
The government awarded 2,350 contracts in the course of the current fiscal year at a cost of 37 billion dollars, the ministry said.
In next year’s budget, the government allocated 36.5 billion dollars to education to build hundreds of new schools and 16 billion dollars to the health sector to build dozens of new hospitals, it said.
Actual revenues for 2009 topped the projected income of 109 billion dollars as oil prices recovered from around 40 dollars a barrel to more than 70.
Riyadh, which sits on the world’s largest proven crude reserves, is currently pumping more than eight million barrels per day.
The ministry said that the trade balance in 2009 dropped by a massive 51 percent to 104 billion dollars while the balance of payments slumped by 84.5 percent to 20.5 billion dollars due a sharp drop in oil income, the ministry said.
Public debt, a majority of which is domestic, has dropped to 60 billion dollars from 63.2 billion dollars.
But as a proportion of Gross Domestic Product, public debt rose to 16 percent from 13.3 percent at the end of 2008.
Nominal GDP shrank 21 percent in 2009 to 375 billion dollars from 475 billion dollars a year ago, the finance ministry said.