JEDDAH — The accumulating Saudi budget surplus since 2003 is something that the Kingdom should worry about, said Ali Al-Tawati, a Saudi economic expert. He said solutions provided to deal with this issue has been superficial and do not consider the increase of population and need to providing more job opportunities for the growing workforce. All solutions, he said, go in one direction, which is saving these surpluses in American and European banks. “All projects taking place in the Kingdom are actually infrastructure projects and are not production projects.” The surpluses, he said, should rather be spent on industrial and technological projects that can enhance the job market, and help invest these surpluses. According to him, the surpluses, when kept only in foreign banks, tend to lose some of their values and in crises, they are at risk of further reduction. “It is anticipated that in the US 2008 economic crisis, the GCC countries lost $30 millions as a result of saving money at foreign banks. Keeping these surplus in American and European banks will just leave them at risk. Add to that, linking the Saudi riyal to the US dollar at a fixed price, tends to reduce the value of these surpluses especially in time of crises.” The Kingdom, said Al-Tawati, will spend in 2013 more on education, health and aviation projects just like last year. “King Abdullah scholarship program is still in progress, there are 20 universities that do not yet have buildings, some hospitals are not yet operating and need budget to employ qualified employees, the Kingdom is now also working on the expansion of many airports and therefore will spend more on all of these projects.” Based on Al-Tawati observations, the government infrastructure projects constitute a real challenge for the public. “The government, thanks to the surpluses, is richer, and therefore it competes in buying the materials needed for the construction projects, … (which) has resulted in increasing the prices because the contracting companies working on government projects are ready to pay more than what the public can pay and there is no way that the public can compete and so they cannot build there own houses,” added Al-Tawati. Meanwhile, Abdullah Al-Jabri, the head of the economic department at Om Al-Qura University, said that the Kingdom needs to spend more on infrastructure, education, health, industry, transportation and technology. According to him more need to be allocated for education and health as individuals will be more productive if they are served with education and healthcare. “More has to be allocated for the industrial sector to be able to encourage the local factories and production and therefore replace the imported goods,” added Al-Jabri. This year's total budgetary revenues are expected to reach SR1.2 trillion, according to prominent Saudi economic experts and financial analysts. They also projected a budget surplus amounting to SR400 billion for 2013.
