The Ministry of Finance and National Economy is pleased to highlight recent economic developments, the 2000 budget and the outcome of the 1999 budget.
RECENT ECONOMIC DEVELOPMENTS
Gross Domestic Product:
GDP is estimated to grow by 8.44 percent in current prices in 1999 mainly as a result of the recovery of oil prices specially in the second half of the year, reaching SR 521.3 billion compared to SR 480.8 in 1998. Private sector GDP is estimated to grow by 2.4 percent in current prices and by 2.0 percent in constant prices with a share of 38 percent of total GDP in current prices and 48 percent in constant prices. Non-oil industrial sector is estimated to grow by 6.3 percent and construction by 2.1 percent in current prices. Electricity, gas, and water sector is estimated to grow by 3.9 percent, and transport and communication sector by 2.4 percent in current prices.
This indicates continued expansion of the private sector, an increase in its efficiency and less dependence on government spending. In particular, the non-oil industrial sector has witnessed a robust growth for several years.
General Price Level:
Inflation, as measured by the cost of living index, is estimated to decline by 1.2 percent in 1999, while the non-oil GDP deflator is estimated at 0.98 percent.
Balance of Payments:
The deficit in the current account is estimated to drop by 70.3 percent in 1999 amounting to SR 14.6 billion compared to SR 49.2 billion in 1998 as a result of the increase in oil prices, government policies to rationalize spending, and the decline in private transfers. Non-oil exports are estimated to grow by 1.6 percent in 1999 totaling SR 23.8 billion due mainly to improvement in petrochemical prices. Imports are estimated to drop by 0.2 percent amounting to SR 102.8 billion.
The government financial and monetary policies continue to be governed by the objective of maintaining stable prices and stable exchange rate. The broad money supply during the first ten months of 1999 grew by 0.9 percent reaching SR 284.7 billion. The growth in money supply is attributable to the increase in oil prices and the decline in private sector balance of payment deficit. This modest growth coincided with a decline in consumer price index.
The Banking Sector:
Banks continue to strengthen their financial positions; their capital and reserves increased by 4.7 percent in the first ten months of fiscal year 1999 reaching SR 42.1 billion by the end of October 1999. The average risk-weighted capital to assets ratio is 21.1 percent, which is about 2.5 times the international standards.
The Share Market:
The share market has improved considerably during 1999 compared to 1998. The NCFEI share index stood at 1974 as of December 16, 1999 compared to 1413 at the beginning of 1999. This represents an increase of 39.7 percent.
Consistent with the government policy towards the private sector, the Council of Ministers approved the final stage of privatizing the power sector. The council also initiated the privatization of the utility services currently provided by the Royal Commission for Jubail and Yanbu. The Ministerial Committee for Privatization is reviewing other proposals.
OUTCOMES FOR FISCAL YEAR 1419/1420 (1999)
The following budgetary outcomes were achieved during 1999:
THE NATIONAL BUDGET FOR 1420/1421 (2000)
The main features of the 2000 budget
The principal appropriations for the main development and public service sectors for 1420/1421 are as follows:
Specialized Development Institutions
In addition, the Specialized Development Institutions (the Industrial Development Fund, the Agricultural Bank, the Real Estate Development Fund, the Credit Bank, and the Public Investment Fund) will continue providing loans to development projects and services in the areas of industry, agriculture, and real estate. The loans to be provided by these institutions in year 2000 are projected at more than SR 6 billion.
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