Spending by the Kingdom of Saudi Arabia in 2012 will likely be higher than budgeted, but the country will still run a fiscal surplus of 4% of GDP, says Fitch Ratings.
Spending growth will moderate in 2012 compared with last year. In 2011, spending growth reached 24%, the highest in a decade. The government raised public sector wages, created government jobs, injected capital into state-owned lenders and pledged more resources for housing. Capital spending – mainly on infrastructure – exceeded 12% of GDP.
Saudi budgets typically underestimate both revenue and spending. In 2002-2011, central government spending exceeded the budget by an average of 24.8%. But in each year other than 2009, oil prices lifted revenues beyond expectations, giving the government room to spend more without running a deficit.
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