19/08/2013
With more stringent requirements for the project
A report expecting to reduce future spending growth in the Kingdom to achieve financial sustainability
Some signs show that the pace of activity of Saudi non-oil private sector had slowed slightly, when spending cut down ATM, POS, banking, and lending purchasing manager's index previous high levels. The National Bank of Kuwait report said that the slowdown could be linked to the delay in the implementation of projects in the second half of the year 2012, in addition to more stringent conditions for project funding, stressing on working to solve those challenges with initiatives and policies that support consumers such as loan law and the law on the Organization of employment ranges, in addition to the continued fiscal stimulus, which will promote growth in the near future.
He pointed out that the country's budget surplus rose to 13.7 percent of GDP in 2012 on the back of higher oil revenues and increased government spending by 6 percent after a much larger increase in 2011. The report said that although the financial position will remain strong and stable in the near term, but that the Kingdom might consider reducing future spending growth, in order to achieve fiscal sustainability over the longer term. He said this would be reflected in the form of moderate increase by 6 percent annually in 2013 and 2014, which will be sufficient to finance increases in capital spending. Noting that with the decline in oil revenues, the budget surplus could fall to 5 percent of GDP over the next two years.
This comes at a time that the ' economic intelligence unit report ' of the Economist Group expected to reduce current account surpluses significantly from about 21 of GDP 153 billion dollars in 2012 to 2.4 of GDP by 2017.
He noted that the high rate of inflation in the Kingdom in 2012 because of the high rents that have increased about 9 %this year with short supply, housing costs also began to rise again recently. The report predicted that the inflation rate is relatively low at around 3.8% in 2013-2014 with low world commodity prices, rising to about 4.7% in 2015-2017 with rising domestic demand pressures. The report predicted that British inflation should remain under control during the period of the forecast from 2013-2017, as a result of the continued support of the prices of commodities like food and electricity.
