Saudi Arabia slowed the pace of planned spending increases in its 2014 budget, even as the world’s biggest oil exporter tries to diversify the economy away from oil and provide jobs for its citizens.
Targeted spending will increase 4.3% to 855 billion riyals ($228 billion) next year, compared with a rise of almost 20% in the 2013 budget, the Finance Ministry said in a statement on its website today. The government expects revenue of 855 billion riyals next year, it said. The kingdom posted revenue of 1.13 trillion riyals this year as the price of Brent crude held above $100 a barrel for a third year. Expenditure came in at 925 billion riyals, exceeding the 820 billion-riyal budget target announced a year ago, ministry data show.
King Abdullah has allocated a record amount of money to build roads, industrial centers and airports as he seeks to reduce the country’s oil dependency and to fight joblessness of 12%. He has used oil money for social welfare, including on education and housing, to ward off the kind of political unrest that swept through other Arab countries in the past three years.
“Budget appropriations will continue to focus on investment programs that enhance long-term strong and sustainable economic development and employment opportunities for Saudi nationals,” the Finance Ministry said.
The nation’s $745 billion economy grew 3.8% in 2013, including expansion of 4.7% for non-oil industries, the Finance Ministry said, citing estimates. That missed the 4% forecast of 19 analysts compiled by Bloomberg. The oil sector declined by 0.6%, it said.
“We expected to see Saudi Arabia release another expansionary budget for 2014, although the pace of planned spending growth was slower than the robust 18% for 2013,” Monica Malik, Dubai-based chief economist of EFG-Hermes, said in response to e-mailed questions. “The focus of the spending was dominated by social areas, such as education and health, including infrastructure in these areas.”
Saudi Arabia has introduced almost $800 billion in stimulus measures since 2008. The winding down of that assistance and restrictions on foreign workers imposed this year have trimmed economic growth. Third-quarter growth slowed to 3.1% from 5.7% in the same quarter last year, according to data from the the Central Department of Statistics in Riyadh.
The Arab world’s biggest economy in April started deporting and arresting undocumented workers as part of a push to create more jobs for its citizens. After two amnesties, which allowed migrants to change their status to work in the kingdom or leave, the measures resumed on Nov. 4.