Giant projects to woo SR1 trillion investments

JEDDAH: Saudi Arabia is expected to witness the implementation of a large number of giant economic, educational and industrial projects in 2011 following the announcement of a SR580-billion budget for the year, the largest in the Kingdom's history.

"It's a budget of giant projects," stated Abdul Rahman Al-Rashid, a prominent businessman and chairman of Asharqiya Chamber. "The business community in the Eastern Province is happy with the budget," he said in a statement on Tuesday.

"It's the largest budget in the history of Saudi Arabia, not only in terms of figures but also in terms of its strong directions, as it aims to achieve greater progress and prosperity for all Saudi people," the Saudi Press Agency quoted Al-Rashid as saying.

The 2010 budget surplus of SR108.5 billion despite the spending of SR626.5 billion - SR86.5 billion more than the projected expenditure of SR540 billion for the year - and the decline of public debt to SR167 billion reflect the strength of the Saudi economy, he said.

The Saudi budget is good news for both Saudi and foreign investors, offering a lot of opportunities in new educational, health, airport, railway, electricity, desalination and energy projects. A high-level Saudi delegation is expected to visit the US shortly to woo investments in projects worth SR1 trillion.

Transport Minister Jabara Al-Seraisry said the allocation of SR11.3 billion to his ministry would be used to carry out new railway, seaport and road projects. His ministry plans to construct 6,600 km of highways and two-way roads across the country during 2011.

Economic and financial analysts have predicted that the new budget, which focuses on increased spending, will enhance the confidence of foreign investors in the Saudi economy and boost foreign investment. Saudi Arabia cut public debt this year from SR225 billion to SR167 billion in another show of economic strength.

Finance Minister Ibrahim Al-Assaf, who presented the new budget to the Cabinet on Monday, said the Kingdom would slash public debt further in 2011. "There would be a further drop in public debt," the minister told Dubai-based Al-Arabiya channel.

The Kingdom forecast a deficit of SR40 billion for 2011 though it usually ends up with a surplus as it calculates the budget with a very conservative oil price. Al-Assaf said the ministry takes pragmatic decision regarding the oil price after consulting with experts at the Supreme Economic Council.

The minister said it was too early to say whether the Kingdom would overspend again as it did in 2010 and in previous years. "It will depend on the circumstances," he said without being more specific. Al-Assaf said increase in infrastructure projects, including in the holy cities of Makkah and Madinah, has contributed to the overspending by SR86.5 billion in 2010. He also said any surplus would go to the Kingdom's massive reserves, accumulated over years.

Welfare of citizens remains the focus of the new budget. "It's a balanced and comprehensive budget," said Social Affairs Minister Yousuf Al-Othaimeen. "It has taken into consideration the basic needs of citizens such as education, training, health and employment," he said, adding that the budget has allocated SR18.8 billion to pension, social insurance and other welfare programs

By P.K. ABDUL GHAFOUR | ARAB NEWS

Dec 21, 2010