The news that Saudi Arabia recorded a surplus higher than economists expected this year is impressive given the massive spending on infrastructure and job growth undertaken by the Kingdom in 2010.
The government predicted a shortfall for 2010, but instead recorded a surplus that exceeded $28 billion according to official estimates.
In an email statement, Banque Saudi Fransi’s Chief Economist John Sfakianakis noted that “the surplus is a combination of higher oil revenues as well as possible lower capex from Saudi Aramco during 2010. Public revenues rose 44.2% from 2009 to SR735 billion, while expenditures climbed 5% to SR626.5 billion. Elevated state spending has played an essential part in maintaining confidence in the economy as the government seeks to re-integrate the private sector into the development process.”
Another “key highlight” for 2010, according to Sfakianakis, was that the Government was able to reduce its domestic debt burden by over 25%. “Domestic debt stands at SR167 billion, or 10.2% of GDP, down from more than 80% in 2003,” Sfakianakis wrote, which “demonstrates Saudi Arabia’s fiscal well-being; as debt problems mount in many advanced economies the kingdom has been able to finance a stimulatory spending programme and slash debt. Higher oil revenue and slow growth in imports allowed for a very comfortable current account surplus of SR260.9 billion ($69.6 billion), triple the year earlier.”
The news is the latest in a string of concrete data that has Saudi economist gleeful at the Kingdom’s economic prospects in the years ahead. While challenges do lie ahead, overall confidence in the Kingdom’s economic stature, as well as general optimism about doing business with Saudi companies, should continue to grow in 2011.