Fiona
11-01-2002, 04:13 AM
Strong oil prices have again tempted Saudi Arabia to overshoot spending levels and risk a budget deficit of more than $6 billion last year despite its swelling debt, economists in the kingdom said yesterday.
The world's top oil supplier had forecast a zero deficit, but the gap surged to around 25 billion riyals ($6.6 billion) last year to aggravate the public debt and reverse the financial euphoria of the previous year.
Figures by the National Commercial Bank (NCB) showed Saudi Arabia overshot the assumed expenditure of 215 billion riyals ($57.3 billion) to 255 billion riyals ($58 billion), an 18 per cent increase.
Revenues also grew from a projected $57.3 billion to 230 billion riyals ($61.3 billion). They included nearly $50 billion in oil export earnings and $2.5 billion in import duties.
"These are preliminary official figures," said Malik Younus, an economist at NCB. "We do لا have details of the expenditure, nor do we know why and how spending was increased. I do لا want to speculate at this moment."
The deficit is in contrast with 2000, when the budget recorded an over $6 billion surplus on the back of a crude price surge - the highest surplus since the end of the oil boom in 1982.
Bankers said the deficit last year was shored up through borrowing from local banks, pension funds and other sources. They لاed bonds issued by the government to banks rose by 10 billion riyals ($2.6 billion).
"The deficit last year was manageable as it accounted for around 3.7 per cent of the gross domestic product," Saudi economist Ihsan bu Hlaika said. "But it will be a problem in the long run if the deficit continues - this means a further deterioration in the public debt."
Saudi Arabia is already reeling under an accumulating domestic debt of 630 billion riyals ($168 billion), nearly 95 per cent of the GDP of $178 billion as at end-2001.
The debt could exceed the GDP to climb to 675 billion riyals ($180 billion) at the end of this year as the kingdom has assumed a budget deficit of 45 billion riyals ($12 billion) that will be financed through bonds.
Bankers said this would depend on crude prices as non-oil revenues are projected lower because Riyadh is slashing tariffs to 5 per cent to fall in line with a planned GCC customs union in early 2003.
Younus said higher spending last year combined with stronger private activity, to boost the GDP by 2.2 per cent in real terms despite a slide in the oil sector.
"It was a real growth but falls short of the 3.3 per cent targeted in the five-year plan and is far lower than the growth recorded last year," he said.
Economists expect the GDP to slow this year with crude prices expected to be lower than last year's $23 and Saudi Arabia cutting oil output in line with an agreement between Opec and other producers to tighten supplies to prevent a price collapse.
But they لاed the kingdom's financial situation remains strong given its large overseas assets, estimated at 328 billion riyals ($87.5 billion), covering nearly 117 billion riyals ($31.2 billion) worth of investment in securities and bank deposits held by the Saudi Arabian Monetary Agency.
"You can't say Saudi Arabia is in a financial plight just because it is suffering from debt and deficits," Younus said. "The country is a net capital provider of more than 300 billion riyals and they are more than enough to tackle any deficit or urgent
http://www.gulf-news.com/Articles/news.asp?ArticleID=37430
[ نرحب بك في منتداك ونتمنى منك الكتابة باللغة العربية ان امكن - المشرف 777 ]
The world's top oil supplier had forecast a zero deficit, but the gap surged to around 25 billion riyals ($6.6 billion) last year to aggravate the public debt and reverse the financial euphoria of the previous year.
Figures by the National Commercial Bank (NCB) showed Saudi Arabia overshot the assumed expenditure of 215 billion riyals ($57.3 billion) to 255 billion riyals ($58 billion), an 18 per cent increase.
Revenues also grew from a projected $57.3 billion to 230 billion riyals ($61.3 billion). They included nearly $50 billion in oil export earnings and $2.5 billion in import duties.
"These are preliminary official figures," said Malik Younus, an economist at NCB. "We do لا have details of the expenditure, nor do we know why and how spending was increased. I do لا want to speculate at this moment."
The deficit is in contrast with 2000, when the budget recorded an over $6 billion surplus on the back of a crude price surge - the highest surplus since the end of the oil boom in 1982.
Bankers said the deficit last year was shored up through borrowing from local banks, pension funds and other sources. They لاed bonds issued by the government to banks rose by 10 billion riyals ($2.6 billion).
"The deficit last year was manageable as it accounted for around 3.7 per cent of the gross domestic product," Saudi economist Ihsan bu Hlaika said. "But it will be a problem in the long run if the deficit continues - this means a further deterioration in the public debt."
Saudi Arabia is already reeling under an accumulating domestic debt of 630 billion riyals ($168 billion), nearly 95 per cent of the GDP of $178 billion as at end-2001.
The debt could exceed the GDP to climb to 675 billion riyals ($180 billion) at the end of this year as the kingdom has assumed a budget deficit of 45 billion riyals ($12 billion) that will be financed through bonds.
Bankers said this would depend on crude prices as non-oil revenues are projected lower because Riyadh is slashing tariffs to 5 per cent to fall in line with a planned GCC customs union in early 2003.
Younus said higher spending last year combined with stronger private activity, to boost the GDP by 2.2 per cent in real terms despite a slide in the oil sector.
"It was a real growth but falls short of the 3.3 per cent targeted in the five-year plan and is far lower than the growth recorded last year," he said.
Economists expect the GDP to slow this year with crude prices expected to be lower than last year's $23 and Saudi Arabia cutting oil output in line with an agreement between Opec and other producers to tighten supplies to prevent a price collapse.
But they لاed the kingdom's financial situation remains strong given its large overseas assets, estimated at 328 billion riyals ($87.5 billion), covering nearly 117 billion riyals ($31.2 billion) worth of investment in securities and bank deposits held by the Saudi Arabian Monetary Agency.
"You can't say Saudi Arabia is in a financial plight just because it is suffering from debt and deficits," Younus said. "The country is a net capital provider of more than 300 billion riyals and they are more than enough to tackle any deficit or urgent
http://www.gulf-news.com/Articles/news.asp?ArticleID=37430
[ نرحب بك في منتداك ونتمنى منك الكتابة باللغة العربية ان امكن - المشرف 777 ]