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
http://www.linkedin.com/pub/nawaf-abu-hejleh/28/342/64a
SKYPE : abuhejleh2
Please find attached our report titled "Pursuing Expansionary Fiscal Policy" on Saudi Arabia's 2013 budget announcement:
Highlights and NCB Views
On Saturday, 29 December 2012, the Council of Ministers endorsed the government's budget for 2013 and announced the final outcome of fiscal operations and macroeconomic performance for 2012. The highlights are:
· The fiscal balance remained in surplus for the third year in a row, edging higher to SAR386.5 billion in 2012, approximately 14.2% of GDP, underpinned by the elevated oil prices and production.
· The Saudi economy continued to grow above the average pre-crisis level in 2012, with real GDP registering 6.8% annual growth, driven by the oil and non-oil sector that grew by 5.5% Y/Y and 7.2% Y/Y, respectively. As we anticipated in our earlier forecasts, growth have eased due mainly to base effects that emanated from the fading out of one-time transfers, estimated at around SAR94 billion, triggered by the royal decrees announced early last year.
· More importantly, the non-oil private sector increased by 7.5% Y/Y, driven by manufacturing and construction that grew by 8.3% and 10.3%, respectively.
· The 2013 budget estimates revenues at SAR829 billion and expenditures at SAR820 billion, projecting a surplus of SAR9 billion. The budget will continue to emphasize both human and physical capital expenditure to support sustainable and balanced growth.
· We project total revenues at SAR1,147 billion and expenditures at SAR870 billion, predicting a surplus of SAR277 billion in 2013. Our forecast is based on an average Arabian light oil price of USD110/bbl for 2013.
· We do believe that the current and future dynamics of global supply and demand points to a tight market balance, as OPEC likely to cut supply next year to counter any escalation in demand downside risks. Hence, Arabian light prices will remain range-bound, protected at a floor of USD80/bbl in 2013, resulting in current account and fiscal surpluses and an increase in net foreign assets.
Best regards,
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