The Ministry of Finance and National Economy is pleased to summarize the recent economic developments, the outcome for the fiscal year 1422/1423 (2002), and the highlights of the budget for the fiscal year 1423/1424 (2003).
Economic Developments in 2002
Overview of FY2002 (1422/1423):
Revenues were projected at SR 157 billion [$ 41.9 billion], whereas actual revenues are estimated at SR 214 billion [$ 57.0 billion]. This is a result of higher than expected oil prices.
Expenditures were projected at SR 202 billion [$ 53.0 billion], whereas actual expenditures are estimated at SR 222 billion [$ 59.2 billion].
Although the deficit projected for FY2002 was SR 45.00 billion [$ 12.0 billion], the actual estimated deficit is far lower, at SR 8.25 billion [$ 2.2 billion].
Gross Domestic Product:
The estimated GDP for 2002 is SR 695 billion [$ 185.58 billion] in current prices, up by 2.3 percent from last year. In real terms, the growth is estimated at 0.74 percent, to give a total of SR 644 billion [$ 171.96 billion].
Private sector GDP is estimated to have grown by 4.2 percent in real terms and 3.7 percent in current prices. All components of the private sector GDP have recorded real growth. The non-oil industrial sector in particular is estimated to have grown by 5.7 percent; communications and transportation by 7.1 percent; utilities by 4.5 percent; construction by 3 percent; and services (wholesale, retail, hotels, and restaurants) by 4 percent. The private sector contribution to the GDP in 2002 is estimated to be around 46 percent, and is therefore becoming the main source of growth and employment.
General price level:
As measured by the cost of living index the general price level inflation is estimated to have declined by 0.4 percent in 2002, while the non-oil GDP deflator is estimated to show a decrease of 0.22 percent.
Balance of Payments:
The current account has an estimated surplus amounting to SR 33.7 billion [$ 8.99 billion] for FY 2002, as compared to a surplus of SR 35.1 billion [$ 9.37 billion] in 2001, according to preliminary data from the Saudi Arabian Monetary Agency (SAMA).
Non-oil exports are estimated to have grown by 1.2 percent to reach SR 31.1 billion [$ 8.3 billion], representing 12.1 percent of total exports. Of the non-oil exports, excluding re-exports, 35 percent are non-petrochemicals; the latter are estimated to have grown by 30 percent in 2002.
Money and Banking:
The nation's macroeconomic policies continue to be guided by the government's objective of maintaining price and exchange rate stability. The broad money supply during the first nine months of 2002 grew by 6.7 percent compared to 1.8 percent for the same period last year. Total bank claims on the public and private sectors increased by 5.1 percent during the first nine months of FY 2002; their capital and reserves increased by 7.8 percent and profits increased by 7.9 percent. In addition, three banks from GCC countries have been licensed to open branches in the kingdom.
In addition to previous government efforts, during FY2002 the Supreme Economic Council approved a strategy for privatization, and the Council of Ministers approved a list of activities targeted for privatization, including water and water treatment, airports, roads, railroads, education, health, and social services. Moreover, the government plans to offer for public sale before the end of this year, 30 percent of the shares of the Saudi Telecommunication Company (STC).
The National Budget for 1423/1424 (FY2003)
Total revenues for FY2003 are projected at SR 170 billion [$ 45.3 billion].
Government expenditure for FY 2003 is budgeted at SR 209 billion [$ 55.7 billion], with a projected deficit of SR 39 billion [$ 10.4 billion].
The budget includes new projects amounting to SR 22.5 billion [$ 6.0 billion], of which SR 15.6 billion [$ 4.2 billion] cover health, education, social development, roads, municipalities and water services, with SR 3.4 billion [$0.9 billion] for water alone.
Appropriations for the main development and public service sectors for FY 2003 (1423/1424) are as follows:
• SR 57.5 billion [$ 15.3 billion] for education, including technical and vocational training
• SR 23.2 billion [$ 6.2 billion] for health services and social development
• SR 7.5 billion [$ 2.0 billion] for municipal services
• SR 6.5 billion [$ 1.7 billion] for transportation and communications
• SR 13.9 billion [$ 3.7 billion] for other infrastructure projects, plus water, industry and agriculture.
Specialized Development Institutions
The Specialized Development Institutions (the Industrial Development Fund, the Agricultural Bank, the Real Estate Development Fund, the Credit Bank, and the Public Investment Fund) will continue to be active in providing credits to projects and services in the areas of industry, agriculture, real estate, and credits for professionals and low-income groups. Total funding provided by these institutions is projected at SR 9.6 billion [$ 2.56 billion] in FY2003.