Saudi Arabia's fiscal surplus could rocket by more than 17 times in 2012 due to strong crude prices, the Saudi American Bank Group (SAMBA) forecast. World oil prices ended mixed Friday as traders weighed disappointing US economic growth data, Europe's debt crisis and the simmering tensions with Iran over its alleged nuclear weapons program. New York's main contract, West Texas Intermediate crude for delivery in March, slipped 14 cents to $99.56 a barrel. In London, Brent North Sea crude for March rose 67 cents to $111.46 a barrel. Announcing its 2012 budget just before the end of last year, the Kingdom projected record high expenditure of SR690 billion and revenue of SR702 billion. Actual crude prices could be as high as $97, according to forecasts by the Saudi American Bank Group (SAMBA). "Our fiscal projection for 2012 is based on an average Saudi oil price of $97/barrel (slightly lower than in 2011) and oil output of just over 9 million b/d (again, fractionally lower than in 2011)," SAMBA said in its monthly report. With its oil output staying above nine million barrels per day, the Kingdom's actual revenue could leap by nearly 40 percent to SR979 billion while spending could swell by just around 11 percent to SR768 billion, the bank report said. The budget balance could then be as high as SR211 billion, more than 17 times the projected surplus of SR12 billion. But the expected surplus this year remains far below the SR306 billion recorded in 2011, when oil prices climbed to their highest ever average of more than $100. The report showed meanwhile that non-oil income is likely to dip somewhat as slightly weaker import spending impacts the government's customs take. Overall revenue is likely to be some SR980 billion, 12 percent lower than in 2011, but comfortably ahead of the 2010 revenue figure of SR742 billion. "We think overall spending will follow revenue and be slightly lower than in 2011. The public sector spending surge in 2011 was substantial, and we think the economy would find it difficult to accommodate a further increase in 2012, and so we see overall spending of around SR768 billion, some 5 percent lower than in 2011," the report said. "Nevertheless, spending on public sector wages is likely to show a further nominal increase given the tense MENA regional political environment." Moreover, SAMBA said the forecast decline in the actual fiscal surplus this year would depress its ratio to 9.8 percent of GDP from 14.1 percent in 2011 but it remains way above the projected balance's ratio of just 0.5 percent. SAMBA expected revenue to stay flat in 2013, with a small increase in oil production being offset by a slight decline in prices. Spending is expected to tick up again, and this will mean a smaller-but still comfortable-surplus of SR169 billion, or 7.5 percent of GDP, it said. "Despite the ostensible health of the public finances, there are structural rigidities that warrant attention. These are best captured by the non-oil fiscal deficit, which has surged from around 20 percent of non-oil GDP in 2002 to an estimated 80 percent this year," the report said. "The steady rise of the non-oil fiscal deficit reflects the build-up of spending commitments, particularly recurrent commitments stemming from public sector pay awards and fuel subsidies, over time." Meanwhile, Saudi Arabia's gross domestic product (GDP) is expected to grow 6.8 per cent in 2012 due to the government's expansionary fiscal stance, Saudi Finance Minister Ibrahim Al-Assaf told reporters at the World Economic Forum early in the week. Al-Assaf said Saudi Arabia's economy is "isolated" from the current global economic turmoil and that the EU has not approached his country for financial help. He added that the Kingdom has a preference for oil prices to settle around $100 to the barrel. "$100 per barrel is a good price for oil. That's our government policy," Al
