Riyadh, Asharq Al-Awsat – The Saudi cabinet approved yesterday the kingdom’s largest ever annual budget, projecting revenues of 829 billion riyals, or $221 billion, for 2013 and 820 billion riyals, or $219 billion of expenditure.

The budget was approved by a special Cabinet session, chaired by Custodian of the Two Holy Mosques King Abdullah in Riyadh. “We hope it will be a budget of goodness and blessing for Saudis as well as other Muslims,” the king said.

In his statement, King Abdullah said the budget reflects the government’s plan to increase spending to strengthen the economy.

He said greater spending would create more job opportunities for Saudis and improve services being extended to the public. He reiterated the government’s desire to invest more in the country’s human resources.

“We have allocated SR 204 billion for education and training and improve learning atmosphere in tune with modern developments in the field,” the king said.

Addressing the budget session, Finance Minister Ibrahim Al-Assaf said the Kingdom’s budget surplus for 2012 amounted to SR 386 billion. Revenues in 2012 amounted to SR 1,239 billion, while expenditure hit SR 853 billion.

Saudi Arabia’s gross domestic product (GDP) is expected to reach SR 2.72 trillion in current prices by the end of 2012 according to the General Statistics Department’s estimates, registering a growth of 8.6 percent compared to last year, the minister pointed out.

The Kingdom’s nonoil GDP is expected to grow 11.2 percent with a public sector growth of 10.6 percent and private sector growth of 11.5 percent in current prices.

The GDP growth in fixed prices is expected to reach 6.8 percent with the petroleum sector making a growth of 5.5 percent, nonoil sector 7.2 percent, public sector 6.3 percent and private sector 7.5 percent.

“On the basis of these figures the total contribution of the private sector to the GDP has reached 58 percent,” Al-Assaf said.

He added: “All components of GDP recorded positive and healthy growth in 2012. More specifically, nonoil industrial sector is estimated to grow by 8.3 percent; construction by 10.3 percent; electricity, gas, and water sector by 7.3 percent; transport, storage and communication sector by 10.7 percent; wholesale, retail, restaurants, and hotels by 8.3 percent; and finance, insurance and real estate by 4.4 percent.”

Al-Assaf referred to a report issued by the International Monetary Fund in 2012 commending the Kingdom’s monetary and financial policies. “Saudi Arabia has been using its high oil prices to accelerate growth and achieve local development targets,” he quoted the IMF report as saying. IMF executive directors have also commended the Kingdom’s efforts to stabilize international oil markets. They have noted the Kingdom’s efforts to fight money laundering and terror funding.

Al-Assaf highlighted the Kingdom’s economic strength. According to a report issued by G20, Saudi Arabia has achieved top place among the member states in fulfilling structural reforms, fiscal discipline, financial markets regulations, resisting trade protectionism and progress in the implementation of the development agenda.

Remarking on the budget announcement Fahd Alturki, senior economist for Riyadh-based Jadwa Investment, said that after several years of big spending rises, the economy was starting to find it harder to respond to additional government money.

Nevertheless, he predicted the budget would help Saudi Arabia grow strongly next year, especially in sectors that depend on domestic demand such as retail and telecommunications.

The country is already enjoying a private sector boom. Gross domestic product, adjusted for inflation, expanded 6.8 percent this year, the finance ministry said. The private sector shot up 7.5 percent, outpacing state sector growth of 6.2 percent.