1996 Public Statement
 

12/31/1996
State Budget for FY 1997
The Ministry of Finance and National Economy today issued the following statement (plus the text of the Royal Decrees) for the FY 1997 State Budget:

On the occasion of the adoption of the State Budget for the fiscal year 1997 [1417/1418], the Ministry of Finance and National Economy is pleased to highlight the main features of the national economy and the budget


RECENT ECONOMIC DEVELOPMENTS
1.  The economy has shown strong growth during 1996, the Gross Domestic Product (GDP) estimated to have grown by 8.6 percent in current prices, thereby recording positive growth for the third consecutive year.   At the end of 1996, the estimated GDP is SR 510 billion (U.S. $ 136 billion), compared to SR 469 billion (U.S. $ 125.1 billion) in 1995, when a growth rate of 4.3 percent was registered.   The private sector’s contribution to economic activity continues to grow, with the 1996 rise estimated at 3.5 percent, the share in the total GDP being 35 percent.  This increase is notable considering that both the oil sector and the government sector have also grown in 1996.
2.  The growth of the economy was accompanied by a remarkable stability in the Kingdom’s cost of living, a clear result of the prudent policies of the government of the Custodian of the Two Holy Mosques.  Inflation is estimated at less than one percent for 1996, while the non-oil GDP deflator has shown a small increase of 1.2 percent.
3.  Preliminary estimates indicate that the Kingdom’s balance of payments has recorded a major improvement, with the current account showing a surplus of SR 700 million (U.S. $ 186.7 million) in 1996 as compared to a deficit of SR 19.9 billion (U.S. $ 5.3 billion) in 1995.  This improvement is due not only to the growth of oil exports, but to the 2.7 percent increase in non-oil exports following their massive 45 percent increase in 1995.  While the growth of non-oil exports was dampened by a cyclical downturn in the price of petrochemicals, the largest component of the Kingdom’s non-oil exports, other non-oil exports registered a growth of 20 percent.    On the other hand, 1996 witnessed a decrease in imports to SR 94.6 billion (U.S. $ 25.2 billion), a drop of SR 1.6 billion (U.S. $ 0.43 billion).  This corresponds to 1.5 percent, a reversal of the 20.3 percent increase witnessed in 1995, largely as a result of an increase in foodstuff prices as well as the restructuring of commodity reserves on the part of importers.
4.  Concerning monetary policy, the hallmark has been to encourage strong growth in real economic activity while maintaining a stable price environment.  This is achieved by maintaining a stable foreign exchange value for the Saudi riyal and an appropriate monetary stance.  Preliminary data for the first eleven months of 1996 indicate that broad money supply recorded a rise of 6.3 percent against the same period in 1995.  The entire increase in money supply has been in deposits, which rose by 5.3 percent in the first nine months of 1996, while currency in circulation actually decreased by 4 percent.  Accordingly, the ratio of currency in circulation to money supply declined from 17.9 percent to 16.6 percent over the year.  It is to be noted that this ratio has been declining since 1990 when it registered 24 percent, and that this indicates a growing sophistication in the Kingdom’s financial sector, primarily due to the expansion of the banking network, consolidation of banking habits, and the impressive improvement in the system of payments.  As a result, the need for cash has declined.
5.  The banking system has shown favorable results during 1996, thanks in part to their continued development efforts and to improved national economic conditions.  The financial position of banks as of November 1996 was SR 352.4 billion (U.S. $ 94 billion), a growth of 3.6 percent from November 1995.  This growth was accompanied by a clear improvement in the banks’ liquidity position as well as the quality of their portfolios.  Banks have continued to develop their operations and provide better services to their customers.  The number of bank branches has increased to 1208, and automatic teller machines (ATMs) have increased in number to 1305, with ATM cards reaching a total of 2.5 million, a remarkable growth of 34 percent since November 1995.  Banks have also continued to strengthen their financial base, with capital and reserves reaching SR 42.1 billion (U.S. $ 11.2 billion) in November 1996 as compared to SR 39.6 billion (U.S. $ 10.6 billion) in November 1995.  The ratio of capital and reserves to deposits as of November 1996 was 19.7 percent, very high by international standards.
6.  The stock market witnessed a good recovery during the year, with the National Center (NCFEI) stock index standing at 153.19 as of December 24, 1996, as compared to 136.76 at the end of the previous fiscal year, representing a gain of 12 percent.  The value of shares traded during the period increased by 7 percent to SR 24.4 billion (U.S. $ 6.5 billion) compared to SR 22.8 billion (U.S. $ 6.1 billion) for the same period in 1995.  The number of shares traded during the period increased by 11.6 percent to 132.1 million shares, and the total number of transactions amounted to 273.3 thousand.

SUMMARY OF THE NEW BUDGET
1.  Total revenues for the fiscal year 1997 are projected at SR 164 billion (U.S. $ 43.7 billion), an increase of SR 32.5 billion (U.S. $ 8.7 billion) over initial projections.
2.  Government expenditure for the fiscal year 1997 will be SR 181 billion (U.S. $ 48.3 billion), an increase of SR 31 billion (U.S. $ 8.3 billion) over last year’s budget.  The additional expenditure was allocated to cover wages and salaries as well as public investment projects.
3.  The fiscal deficit for 1997 is projected at SR 17 billion (U.S. $ 4.5 billion), SR 1.5 billion (U.S. $ 0.4 billion) less than that projected for last year. 


THE MAIN APPROPRIATIONS FOR 1997
SR 41.7 billion (U.S. $ 11.1 billion) for education, including vocational and technical training sectors;
SR 17.8 billion (U.S. $ 4.8 billion)  for health services and social development;
SR 6.5 billion (U.S. $ 1.7 billion)  for municipal services and water authorities;
SR 8.6 billion (U.S. $ 2.3 billion)  for infrastructure, industry and electricity, which include projects financed from the electricity fund;
SR 7.1 billion (U.S. $ 1.9 billion)  for subsidies and social programs.

SPECIALIZED DEVELOPMENT INSTITUTIONS
In addition to the government expenditure outlined above, the specialized development institutions, viz., the industrial development fund, the agricultural bank, the real estate fund, and the credit bank, will continue to provide loans for development projects in the areas of industry, agriculture and real estate.  The loans provided by these institutions in 1997 are projected at SR 5 billion (U.S. $ 1.3 billion).

 


TEXT OF BUDGET DECREES

(A)  Royal Decree M/09 dated 20/08/1417 (December 30, 1996)
“By the Grace of Almighty God, We, King Fahd Bin Abdul Aziz, King of the Kingdom of Saudi Arabia, pursuant to Articles 72, 73, 76, and 78 of the Basic System of Government, and the regulations issued by royal decree A/90 dated 27/08/1412;  and to Articles 25, 26 and 27 of the Council of Ministers System and the regulations issued by royal decree A/13 dated 03/03/1412;   together with royal decree number M/6 dated12/04/1407 stipulating the start of the state’s fiscal year to be the tenth of Capricorn [in the Zodiac calendar] each year; and after perusal of the statements pertaining to the revenues and expenditures of the state for the fiscal year 1417/1418 [1997] and of cabinet resolution number 125 dated 20/08/1417 [December 30, 1996];    we order the following:
1.  State revenues for the fiscal year 1417/1418 [1997] are estimated at SR 164 billion (U.S. $ 43.7 billion), and expenditures at SR 181 billion U.S. $ 48.3 billion).
2.  Revenues are to be obtained in line with the financial systems and are to be paid in their entirety to the Saudi Monetary Agency (SAMA) and its branches for the account of the Ministry of Finance and National Economy.
3.  The Ministry of Finance and National Economy is authorized to obtain loans to cover the deficit between expenditure and revenue for the fiscal year 1417/1418 [1997].
4.  Expenditures are to be paid in accordance with the budget and the instructions pertaining to it.
5.  a) Transfer of allocations within the chapters of the budget are to take place only after approval by the cabinet in line with a joint report submitted by the minister concerned (or head of an administration with an independent budget) and the Minister of Finance; b) Transfer of allocations in the articles of the first and second chapters are to take place in line with a decision from the Minister concerned (or head of an administration with an independent budget), provided that the sum transferred to any article does not exceed half of the original budget appropriation, with the exception of those articles concerning salaries.
6.  An appropriation is to be used only for its original purpose, and no payment order is to be issued in excess of the appropriation.
7.  No decision is to be issued, and no contract concluded, that leads to a financial obligation for a subsequent fiscal year, with the exception of (a) contracts of continuous or periodical implementation, such as those for rental, employment, catering, or consultative or other services;  (b) contracts approved in the second chapter, provided that the value of the contract does not exceed the approved sum of money during the current fiscal year, and that the period for contract implementation does not exceed the end of the subsequent fiscal year;  and (c) contracts of indivisible projects, provided they do not exceed the approved appropriation for each project.
8.  If it appears during this fiscal year that there were obligations from previous years that are greater than the approved appropriations, the issue is to be submitted to the cabinet if the excess was unjustified, otherwise the Minister of Finance and National Economy is authorized to pay them from the appropriations of the current fiscal year.
9.  No appointment or promotion of employees or workers is to be carried out other than in the posts approved by this budget in line with the conditions set.
10.  With the exception of the appointment of ministers, no new jobs or grades are to be created during the fiscal year 1417/1418 [1997] other than those approved in this budget, with the exception of posts created in accordance with the conditions set by the system for temporary employment;  demotion for these approved jobs and grades, however, can be carried out in line with a decision from the President of the General Civil Service Bureau after a recommendation from a committee formed by representatives from the Ministry of Finance and National Economy, the Civil Service Bureau, and the authorities concerned.
11.  The administrative structure of each authority is to be approved in accordance with the general budget and no amendment is to be made without a decision from the Higher Committee for Administrative Reform.  Titles of jobs, however, may be changed in line with the requirements of job classification by a decision from the President of the Civil Service Bureau after a recommendation by a committee comprising representatives of the Ministry of Finance, the Civil Service Bureau, and the authorities concerned.
12.  The Minister of Finance and National Economy will issue the required instructions for implementation of this budget within the parameters of the regulations stipulated in this decree.
13.  His Royal Highness the Deputy Prime Minister and all the Ministers will carry out this decree, each in the field of his specialty.”

(B)  Royal Decree M/10 dated 20/08/1417 (December 30, 1996)
“By the Grace of Almighty God, We, King Fahd Bin Abdul Aziz, King of the Kingdom of Saudi Arabia, pursuant to Articles 72, 73, 76, and 78 of the Basic System of Government, and the regulations issued by royal decree A/90 dated 27/08/1412;  and to Articles 25, 26 and 27 of the Council of Ministers System and the regulations issued by royal decree A/13 dated 03/03/1412;  and after perusal of cabinet resolution number 126 dated 20/08/1417 [December 30, 1996];    we order the following:
1.  Expenditures for the municipalities and water departments are estimated for the fiscal year 1417/1418 [1997] at SR 6,094,484,000 (U.S. $ 1,625,195,733).
2.  Revenues of the municipalities and water departments are estimated for the fiscal year 1417/1418 [1997] at SR 1,027,790,000 (U.S. $ 274,077,333).
3.  The deficit amounting to SR 5,066,694,000 (U.S. $ 1,351,118,400) is to be approved in the general budget of the state.
4.  The municipalities and water departments are to obtain their revenues in line with the set systems and regulations, and the authorities concerned are to follow up the implementation in this context.
5.  The expenditures are to be paid in line with the set financial regulations and systems.
6.  The regulations stipulated in Articles 5, 6, 7, 8, 9, 10, and 11 of Royal Decree Number M/09 dated 20/08/1417 [December 30, 1996] are valid for the budget of the municipalities and water departments.
7.  Any surplus in the appropriations of branch municipalities is to be transferred to other articles of their budget only after approval by the Prime Minister in line with a joint recommendation from the Minister of Municipalities and Rural Affairs and the Minister of Finance and National Economy.
8.  The Minister of Finance and National Economy will issue the required instructions for implementation of this budget within the parameters of the regulations stipulated in this decree.
9.  His Royal Highness the Deputy Prime Minister and the Minister of Municipalities and Rural Affairs will carry out this decree, each in the field of his specialty.”

(C)  Royal Decree M/11 dated 20/08/1417 (December 30, 1996)
“By the Grace of Almighty God, We, King Fahd Bin Abdul Aziz, King of the Kingdom of Saudi Arabia, pursuant to Articles 72, 73, 76, and 78 of the Basic System of Government, and the regulations issued by royal decree A/90 dated 27/08/1412;  and to Articles 25, 26 and 27 of the Council of Ministers System and the regulations issued by royal decree A/13 dated 03/03/1412; together with royal decree no. M/6 of 12/04/1407;  and after perusal of the statements pertaining to the revenues and expenditures of public institutions attached to the general state budget for the fiscal year 1417/1418 [1997] and of cabinet resolution number 127 dated 20/08/1417 [December 30, 1996];    we order the following:
I.  Appropriations of revenues and expenditures of public institutions attached to the general state budget for the fiscal year 1417/1418 [1997] are as follows:
1.  Ports Authority: expenditures endorsed at SR 575,944,000 (U.S. $ 153,585,066.7).
2.  Saudi Arabian Airlines (SAA): revenues, SR 9,063,680,000 (U.S. $ 2,416,981,333.3);  expenditures to be made in accordance with its system.
3.  Saudi Consolidated Electricity Company (SCECO): revenues and expenditures, SR 688,519,000 (U.S. $ 183,605,066.7).
4.  Grain Silos and Flour Mills Organization: revenues, SR 2,590,000 (U.S. $ 690,666.7);  expenditures, SR 3,434,458,000 (U.S. $ 915,855,466.7).
5.  Saline Water Conversion Organization: revenues and expenditures, SR 2,368,341,000 (U.S. $ 631,557,600).
6.  Saudi Railways Organization: revenues and expenditures, SR 205,539,000 (U.S. $ 54,810,400)
7.  Petroleum and Minerals Organization (PETROMIN): revenues and expenditures, SR 45,328,000 (U.S. $ 12,087,466.7).
8.  Royal Commission for Jubail and Yanbu: revenues and expenditures, SR 1,132,893,000 (U.S. $ 302,104,800).
9.  Saudi Standards Organization: revenues and expenditures, SR 61,997,000 (U.S. $ 16,532,533.3).
10.  King Saud University (KSU): revenues and expenditures, SR 1,861,232,000 (U.S. $ 496,328,533.3).
11.  King Abdul Aziz University (KAAU): revenues and expenditures, SR 1,231,301,000 (U.S. $ 328,346,933.3).
12.  King Fahd University for Petroleum and Minerals (KFUPM): revenues and expenditures, SR 384,871,000 (U.S. $ 102,632,266.7).
13.  Imam Muhammad Bin Saud Islamic University: revenues and expenditures, SR 951,602,000 (U.S. $ 253,760,533.3).
14.  The Islamic University in Madinah: revenues and expenditures, SR 208,767,000 (U.S. $ 55,671,200).
15.  King Faisal University (KFU):  revenues and expenditures, SR 468,325,000 (U.S. $ 124,886,666.7).
16.  Umm Al-Qura Islamic University: revenues and expenditures, SR 598,260,000 (U.S. $ 159,536,000).
17.  Public Corporation for Technical Education and Vocational Training: revenues and expenditures, SR 1,197,410,000 (U.S. $ 319,309,333.3).
18.  King Abdul Aziz City for Science and Technology (KAACST):  revenues and expenditures, SR 246,711,000 (U.S. $ 65,789,600).
19.  Public Administration Institute: revenues and expenditures, SR 157,744,000 (U.S. $ 42,065,066.7).
20.  Saudi Red Crescent Society: revenues and expenditures, SR 204,443,000 (U.S. $ 54,518,133.3).
21.  Public Organization for Military Industries: revenues and expenditures, SR 541,378,000 (U.S. $ 144,367,466.7).
22.  General Organization for Social Security (GOSI): revenues, SR 18,452,000,000 (U.S. $ 4,920,533,333.3), to be deposited at the Saudi Monetary Agency (SAMA);  expenditures, SR 9,293,640,000 (U.S. $ 2,478,304,000), to be paid out in accordance with the regulations.

II.  Surpluses of revenues and surpluses from expenditures are to be repaid to SAMA at the end of the fiscal year.
III.  Revenues and expenditures are to be made in accordance with the approved regulations and instructions.
IV.  With the exception of Saudi Arabian Airlines (SAA), whose budget is computed according to commercial accounting systems, the budgets of all other public establishments are subject to the rules contained in articles 5, 6, 7, 8, 9, 10, and 11 of the royal decree M/09 dated 20/08/1417 [December 30, 1996].
V.  The Minister of Finance and National Economy will issue the required instructions for implementation of this budget within the parameters of the regulations stipulated in this decree.
VI.  His Royal Highness the Deputy Prime Minister and the ministers concerned will carry out this decree, each in the field of his specialty.”

 

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