Saudi Arabia expects to boost spending in 2017

Saudi Arabia plans to boost spending in 2017 to SAR 890 billion to boost economic growth, the ministry of finance said in a statement Thursday.

The kingdom expects its deficit to shrink to SAR 198 billion in 2017 because of higher oil prices and non-oil revenues, while revenue is estimated at SAR 692 billion.

Estimated expenses for 2017 were higher by SAR 65 billion, compared to last year.

The government has set aside SAR 200 billion for the education sector, while SAR 120.4 billion were allocated for healthcare and social development.

Meanwhile, the 2016 budget showed a deficit of SAR 297 billion, nine percent lower than expected. Revenue reached SAR 528 billion, while expenses hit SAR 825 billion.

Actual expenses dropped by SAR 15 billion compared to estimates. Public debt rose to SAR 316.5 billion, or 12.3 percent of gross domestic product (GDP), compared to SAR 142 billion last year.

The country’s GDP rose by 1.4 percent to SAR 2.581 trillion, while the inflation rate jumped to 3.4 percent year-on-year (YoY).

Santhosh Balakrishnan, manager and research analyst at Riyad Capital, said the budget announcement was “positive on the first cut,” adding that it was a welcome move aiming to boost spending amid cost rationalization.

“Deficit funding though sukuk bond sales will boost the local capital markets and pave away for an active bond market in KSA, making cost of capital more streamlined in the future,” he told Argaam.