Budgeted spending is at another all-time high in 2013, as the government continues with its program to upgrade the human and physical infrastructure and spurring economic growth. One highlight of the Ministry of Finance (MoF) budget announcement is the 18 percent jump in revenues. With no new initiatives announced, we think this is a sign that the government has maintained the less conservative approach with its oil price assumption since last year. For the second consecutive year, the Kingdom has budgeted for a surplus which set to reach SR9 billion this year (0.3 percent of expected GDP). In the US and across Europe, countries are cutting spending to bring budget deficits under control and reduce their debt. This is not a concern for the Kingdom. While the planned surplus is small, debt is very low and should a deficit occur it can be financed comfortably by drawing on the vast stock of foreign assets rather than issuing new debt, we think.
