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Saudi Arabia is expected to overshoot public spending by as much as 20 per cent as part of an ongoing expansionary fiscal policy funded by strong oil prices and aimed at cementing the domestic economy.
Banque Saudi Fransi (BSF), one of the largest banks in the kingdom, has predicted 20 per cent rise in actual spending and said this would quash earlier scenarios about a possible surplus in the country's budget, reports Emirates 24/7. BSF's chief economist John Sfakiankis said actual spending peaked at more than US$159 billion in 2009, nearly 26 per cent above state expenditure projections for the 2009 budget of just over US$126 billion.
In December, the Saudi finance ministry estimated in its 2010 budget statement that state expenditures reached nearly US$147 billion in 2009, adding that the government discovered a full US$12.2 billion of spending that had taken place in 2009. "As a result of the revision in actual data this September, we are revising our 2010 state expenditure forecast to US$173 billion, reflecting our expectation that government departments will overspend their allocations by about 20 per cent this year," said Sfakiankis.
He added that it was likely that the government's initial expenditure estimates, to be released in December, will underestimate the level of overspending that has taken place, which has happened in recent years. Sfakiankis cited recent strict instructions by the government to all departments to rein in spending, but said he believed it would likely take a few years before the level of over-spending reaches acceptable levels of closer to 10 per cent.