The State Budget for Fiscal Year 2007 (1427-1428 H) was approved in a Cabinet meeting chaired by Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz today.
The King announced the budget in a speech. The translation of his remarks is as follows:
“I would like to announce the budget of the new fiscal year, 1427-1428H, which amounts to SR 380 billion [$101.3 billion], the highest budget for the Kingdom, and it exceeds the previous budget by SR 45 billion [$12 billion].
We have issued our directives to prepare this blessed budget so as to make it contain the investment for the resources that are available for this dear country within the framework of the policies and goals of the Eighth Development Plan, and in line with the priorities decided by the Supreme Economic Council, taking into account the implementation of the development programs and projects, notably the programs and projects that make available the necessary services for the citizens as well as work for reduction of the general debt, which we have, with the grace of Almighty Allah, have repaid a great portion of it, and the remainder stands at SR 366 billion [$97.6 billion] by the end of this fiscal year.
In line with the approved development and service projects in recent fiscal years, the new budget included projects with an estimated cost of about SR 140 billion [$37.3 billion]. These projects will realize balanced development in the regions.
As development of human resources constitutes a basic pillar for comprehensive development, we have continued spending on the education of our sons and daughters and training in its various forms. We are keen on meeting the requirements needed for raising the educational capabilities of teachers and female teachers, as well as introduction of modern educational methods for the improvement of performance.
The program of scholarships continued on focusing on the important specializations.
We have issued our directives to increase the capacity of the educational institutions and distributing these institutions in a balanced manner among the regions, focusing on the matters that meet the requirements of the labor market.
The new budget included educational and training projects that will lead to the establishment and furnishing of more than 2,000 schools for boys and girls as well as opening of four new universities in Baha, Tabuk, and Najran, in addition to a girls’ university in Riyadh with their university cities.
The other universities were provided with 56 new faculties and opening of 19 faculties as well as establishment and furnishing of 19 buildings for the faculties, and technical and vocational institutes for boys and girls, and opening of 14 technical institutes.
While taking into account the importance of improving the health care, new projects have been approved for establishing and furnishing more than 380 primary health care centers in all regions of the kingdom as well as the establishment of 13 new hospitals and expansion and development of several other existing hospitals, giving attention to the centers of emergencies and the intensive care units, as well as supporting the complementary program for tackling the problems of poverty, and the national charitable fund.
The budget includes the implementation of projects of new roads with a length of about 8,000 kilometers as well as several municipal and service projects, and implementation of projects of dams and sewage services.
Regarding the industrial sector, and to attract industrial investments, the budget includes new projects for the two industrial cities of Jubail and Yanbu, and introduction of services to the other industrial cities, as well as starting the implementation of the first phase of the national policies for sciences and technology. It also includes the required allocations for the development of information technology and the implementation of governmental electronic transactions.
I would like to draw the attention of the ministers and heads of the departments to give utmost attention to the implementation of this budget in a manner that serves the citizens and positively contributes to the acceleration of the wheel of comprehensive development.
I pray to Almighty Allah to perpetuate his bounties on us and to enable the country and the citizens to benefit from this budget.”
During the meeting, the Minister of Finance briefed the Cabinet on international issues and their impact on oil revenues and State revenues. The Minister also provided an overview of the financial results of FY 1426-1427 H, the national debt and the highlights of the new budget.
Turning to the global economy, the Minister of Finance said that according to reports by international financial institutions global economic growth continues to be strong, despite fluctuations in oil prices. The impact of fluctuating oil prices has been limited by continuing strong growth in a number of countries and the ongoing improvement of corporations and the economic environment.
On the Kingdom’s economy, the Minister of Finance said that the GDP for 2006 is expected to reach SR1,301,200,000,000 [$347 billion], with a growth rate of 12.4 percent, compared to 23.3 percent the previous year. Regarding fixed prices, the GDP is expected to grow by 4.2 percent, as the private sector is expected to increase by 6.3 percent.
While all sectors of the economy have achieved positive growth, the Minister said, the growth in the non-oil transformative industries is projected to reach 10 percent; and in telecommunications, transportation and storage, 9.5 percent; wholesale, retail, and hospitality, 5.2 percent.
Also in 2006, the Minister said that the Kingdom has managed to keep inflation rates low despite the increase in government expenditures and private sector activities. He warned however that there are some major challenges due to the increase in inflation pressures, especially in the construction sector, which requires attention.
The Minister noted that the public debt will be reduced to SR 366,000,000,000 [$98 billion] by the end of FY 2006, 28 percent of the projected GDP for 2006.
The State Budget for FY 2007 focuses on developmental projects to promote ongoing growth, increasing the economy’s capacity, and providing jobs for citizens. Appropriations also focus on the education, health, water, sewage, transportation and social services sectors.