Nawaf Y. Husein
Faculty Member
Msc, CRP , CLBB
Saudi Training Society Member
Institute of Banking
Saudi Arabian Monetary Agency ( SAMA)
P.O.Box : 10820 Riyadh 11443 Saudi Arabia
Tel : + 966 1 463 3000 Ext. 3825
Fax: + 966 1 466 2368
Mobile : + 966 55 48 44 828
SKYPE : abuhejleh2
Please find attached our report titled "Fiscal Policy Remains Expansionary" on Saudi Arabia's 2012 budget announcement:
Highlights and NCB Views
On Monday, 26 December 2011, the Council of Ministers endorsed the government's budget for 2012 and announced the final outcome of fiscal operations and macroeconomic performance for 2011. The highlights are:
·The fiscal balance remained in surplus, edging higher to SAR306.0 billion in 2011, approximately 14.0% of GDP, on the back of both higher oil prices and production. It is worth noting that SAR250 billion of the 2011's surplus will be deposited at SAMA to finance the 500, 000 housing units announced in March 2011.
· As we anticipated in our earlier forecasts, 2011 was a historical year for the Saudi economy, with real GDP registering 6.8% annual growth, driven by the non-oil sector that grew by 7.8% Y/Y. More importantly, the non-oil private sector increased by 8.3% Y/Y, an unprecedented pace for almost all sectors, notably manufacturing and construction.
· The 2012 budget estimates revenues at SAR702 billion and expenditures at SAR690 billion, projecting a surplus of SAR12 billion. The budget will continue to emphasize both human and physical capital expenditure to support sustainable and balanced growth.
· We project total revenues at SAR930 billion and expenditures at SAR780 billion, predicting a surplus of SAR150 billion in 2012. Our forecast is based on an average Arabian light oil price of USD95/bbl for 2012.
· The external environment is exhibiting mounting uncertainties, thus, pushing oil markets into a critical balancing phase, with producers and consumers worried about demand downside risks and supply uncertainties. Hence, Arabian light prices will remain range-bound, protected at a floor of USD80/bbl in 2012, resulting in current account and fiscal surpluses and an increase in net foreign assets.
· Real GDP growth will ease in 2012 due mainly to base effects, attributed to projected lower oil production, and the royal decrees announced in 1Q2011, which injected one-time transfers estimated at around SAR94 billion, representing around 4.3% of 2011 GDP.
Best regards,
NCB Economics Department
PO Box 3555, Jeddah 21481
Telephone: +9662646-3232 FAX: +9662644-9783
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