JEDDAH/DUBAI – Saudi Arabia's government spending is likely to increase at a more moderate pace in coming years, Saudi Finance Minister Ibrahim Al-Assaf said Tuesday. Speaking to reporters at a meeting of Arab finance ministers and central bankers in Dubai, Al-Assaf said he was confident that his government could maintain current levels of spending in the medium term even if oil prices fell. But future annual spending increases are likely to be in the high single digits, lower than in recent years, he said at a meeting of Arab finance ministers and central bankers in Dubai. “I expect fiscal spending to increase at more moderate rates than in the past because we have been putting a lot of resources into investment, and we will reach a stage when we expect expenditure to grow at a rate that's not as high as it has been in the last few years,” Al-Assaf said. “I cannot pin down what's the rate, but I would imagine it will be in single digits, maybe the higher side of single digits.” Saudi Arabia has boosted government spending on welfare, job creation and economic infrastructure sharply in the last several years. Al-Assaf said: “What I want to say is that over the last few years we set a number of firewalls and defense lines in case there is a decline in oil prices, which we do not expect.” “We have reduced debt to a very small percentage of our GDP (gross domestic product), we have increased our reserves so we can maintain expenditure over the medium term. We are now confident that we can maintain it over the medium term even if oil prices decline,” he said. Moreover, he said a plan to boost the capital of Arab development funds by at least 50 percent is to be implemented over the next five years. He said the increase will help Arab financial institutions such as the Arab Monetary Fund, Arab Fund for Economic and Social Development, the Arab Investment and Export Credit Guarantee Corporation and Arab Bank for Economic Development in Africa achieve their goals. “Every institution has a particular goal,” Al-Assaf said. King Abdullah bin Abdul Aziz of Saudi Arabia unveiled in January an initiative to raise the capital of Arab financial institutions to help meet growing demand for funding regional development projects, especially in poor Arab states. The initiative, announced in January during the third Arab Economic and Social Development Summit in Riyadh, was part of the agenda during an annual meeting of finance ministers held Tuesday in Dubai. Speaking exclusively to Al Arabiya, Al-Assaf said the capital boost will likely be implemented in several stages spanning five years or more. “In this meeting we will discuss the ideal way to implement the decision of the Arab summit, which is based on the King Abdullah's initiative,” he said. Al-Assaf did not specify the value of the anticipated capital boost but said both financial reserves of financial institutions and fresh money will be used. — SG/Agencies
